World trade growth to drop below GDP for first time in 15 years

According to the latest press release from World Trade Organization (WTO), which is available here, https://www.wto.org/english/news_e/pres16_e/pr779_e.htm, the global trade is set to grow at a slower pace than the World GDP for the first time since 2001 and the pace of growth will be slowest since the 2008/09 crisis. The global trade is expected to expand at 1.7 percent, revised down from 2.8 percent estimated in April. WTO expects the world GDP to expand by 2.2 percent this year. It revised trade growth expectations downward for next year to somewhere between 1.8 percent and 3.1 percent from 3.6 percent estimated before.

The organization points to a sharper decline in merchandise trade volume (-1.1 percent q/q) in the first quarter of the year and slower the expected rebound (+0.3 percent) in the second quarter due to weakness in China, Brazil, and North America as responsible for the slowdown.

Below are some other key points from the report,

• Trade growth was weaker than expected in the first half of 2016 due to falling import demand and slowing GDP growth in several major developing economies as well as in North America.

• Certain trade-related indicators have improved, including export orders and container port throughput, but overall momentum in trade remains weak.