> Roberto Azevêdo’s speeches
Thank you all for coming. You’ve seen the press release, so I’ll run through a few of the main headlines before handing over to Bob Koopman — who joined us towards the end of last year as our new Chief Economist.
World merchandise trade recorded yet another weak expansion in 2014.
With an increase of just 2.8% in volume terms, trade growth barely exceeded that of world output. And of course it remained well below the 5.1% average since 1990.
2014 was also the third year in a row with trade growth of less than 3%.
There has only been one other such period since the Second World War in which trade growth has been so weak. That was from 1980 to 1984. However, that period included two outright contractions in trade due to the oil shock and global recession of ’80-81. In contrast, the prolonged weak growth over the last three years has been during a period of economic expansion, although a very modest one.
This has caught the attention of economists. There has been a debate about whether it represents a long-lasting structural change or a transitory setback due to an easing of the global business cycle.
The answer is probably a mix of both structural and cyclical issues.
On the structural side, the boosts provided by rapid globalisation in the 1990s and the emergence of new technologies have begun to stabilise. Here I’m referring to, for example, the efficiency gains that information technology has brought to logistics and port management — or the contribution it has made to coordinating global production chains.
On the cyclical side, we know that certain factors are also playing a major role. Demand has been very weak in developed markets since the crisis, and growth in the emerging economies has also slowed. Clearly this has a large impact on trade growth, which is very closely linked to GDP growth.
Looking forward, with economic growth still fragile and geopolitical tensions ongoing, we are cautiously forecasting that trade will continue its slow recovery.
The forecasts we are publishing today point to slightly faster trade growth over the next two years. We expect to see growth above 3%, but not much above world GDP growth.
In 2015 we expect the volume of global merchandise trade to grow 3.3%, if GDP growth is around the consensus estimate of nearly 3%.
In 2016, trade growth could accelerate to 4% if GDP growth picks up slightly, as has been forecast, to just over 3%.
Exports and imports are expected to grow slightly faster in developing economies than in developed.
We expect that developed economies’ exports could increase by 3.2% in 2015 while growth in shipments from developing economies would be closer to 3.6%.
Meanwhile, imports of developed countries could rise 3.2% and those of developing economies could expand by 3.7%.
However, as I have indicated, there are a number of factors that could affect these forecasts — and the risks are mostly on the downside. So these numbers could prevail if conditions don’t further deteriorate.
These potential negative factors could include, for example:
- Lower-than-expected GDP growth, particularly in the emerging economies,
- The escalation of geopolitical tensions,
- And the possible effects of divergent monetary policies in developed economies, which could provoke strong shifts in exchange rates and capital flows.
The IMF are releasing their World Economic Outlook later today and that will give a clear sense of the prospects for GDP growth, which is so important for trade, and the potential risks on the horizon.
While growth remains fragile around the world, I would stress again that we are not powerless to act.
Trade can be a powerful policy tool to leverage economic growth and development.
While many policy options have been tested since the crisis, we haven’t yet explored the full potential of trade policy to support growth.
The WTO’s successful Bali Package — which members are implementing now — was an important step. But of course we can do more to develop a trade-friendly global environment.
We are currently working to develop a work programme by July this year which will set us on course to conclude the remaining issues of the DDA.
Groups of members are also working to expand the WTO’s Information Technology Agreement and liberalize trade in environmental goods.
Success on each of these fronts could make a difference in supporting the modest recovery in trade growth that we are forecasting today. And therefore it would also help to support growth and development in the years ahead.