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Tags: WTO | economy | trade | forecast

WTO Cuts 2014 Trade Growth Forecast to 3.1 Percent on Ebola Threat

By    |   Tuesday, 23 September 2014 11:39 AM

Global goods trade will grow less than hoped this year and next, and factors including regional conflicts and the Ebola outbreak are putting a quick return to stronger growth at risk, the World Trade Organization said on Tuesday.

Trade in goods will grow by 3.1 percent this year, much less than the 4.7 percent the WTO forecast in April. It cited "weaker-than expected GDP growth and muted import demand in the first half," according to a statement.

"International institutions have significantly revised their GDP forecasts after disappointing economic growth in the first half of the year," said WTO chief Roberto Azevedo in a statement.

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"In light of this, the WTO's forecasts for trade growth have also been revised downwards for 2014 and 2015. Uneven growth and continuing geopolitical tensions will remain a risk for both trade and output in the second half of the year," he said.

Among the problems, the WTO said, are tensions over the Ukraine crisis pitting the European Union and the United States against Russia.

The resultant tit-for-tat trade measures have notably affected agricultural commodities.

Conflict in the Middle East is also stoking uncertainty, and could lead to a spike in oil prices if the security of supplies is threatened, said the Geneva-based body.

And the Ebola outbreak raging in west Africa has also sown panic over its economic impact in the region and potentially beyond, it added.

The WTO noted that growth and import demand was particularly muted in natural resource exporting regions such as South and Central America.

Trade was likely to grow 4.0 percent in 2015 rather than the 5.3 percent expected previously, still far below the 20-year average of 5.2 percent and "risks abound in the form of geopolitical tensions, regional conflict and health crises (Ebola)."

WTO economists had previously seen conditions for stronger trade returning after a two-year slump, but instead it stagnated in early 2014 as import demand fell in developing countries and harsh U.S. weather and a Japanese sales tax rise also weighed.

The possibility of worse tensions over Ukraine, a deepening Middle East conflict and increased panic caused by West Africa's Ebola outbreak have all clouded the forecast, the WTO said.

Imports into South and Central America are expected to fall by 0.7 percent this year as economies are hit by a combination of civil conflict, weak non-fuel commodity prices and the easing of growth in Asian export markets, the WTO said.

It also pointed to sluggish economic performances in the United States and Germany, which have sapped global import demand.

The 160 economies which make up the WTO set trade rules among themselves in an attempt to ensure a level playing field and spur growth by opening markets and removing trade barriers, including subsidies, excessive taxes and regulations.

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But they have failed repeatedly to conclude the Doha Round of trade liberalization talks launched in 2001 with the stated aim of underpinning development in poorer nations.

"This is a moment to remind ourselves that trade can play a positive role here. Cutting trade costs and broadening trade opportunities can be a key ingredient to reversing this trend," said Azevedo.

(Reuters, AFP and the Associated Press contributed to this article)

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Finance
Global goods trade will grow less than hoped this year and next, and factors including regional conflicts and the Ebola outbreak are putting a quick return to stronger growth at risk, the World Trade Organization said on Tuesday.
WTO, economy, trade, forecast
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2014-39-23
Tuesday, 23 September 2014 11:39 AM
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