Global trade is rebounding strongly but risks remain, the World Trade Organization said on Thursday, with commerce expected to grow by 3.6% in 2017, well above last year's 1.3%.

The forecast marks a sharp upward revision of the WTO's April estimate, when it foresaw growth of 2.4% and in a range of 1.8-3.6%, due to a high level of political and economic uncertainty.

That range has now been narrowed to 3.2-3.9%, based on accelerating economic growth and rising import demand in China and the United States, which spurred trade within Asia.

“The improved outlook for trade is welcome news, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” WTO Director-General Roberto Azevedo said in a statement.

“These risks include the possibility that protectionist rhetoric translates into trade restrictive actions, a worrying rise in global geopolitical tensions and a rising economic toll from natural disasters.”

However, trade growth was becoming more synchronized across regions than it had been for many years, which could make the current trend self-reinforcing, he said.

The fast pace of 2017, which followed a very weak year, is unlikely to be sustained in 2018, with U.S. and euro zone monetary policy expected to tighten and China likely to rein in easy credit to stop its economy from overheating, the WTO said.

"All of these factors should contribute to a moderation of trade growth in 2018 to around 3.2% (the full range of the estimate being from 1.4% to 4.4% )," it said.

The ratio of trade growth to GDP growth, which traditionally ran at about 2:1 but has slumped to about 1:1 in the decade since the financial crisis, should rise this year, with trade growing 1.3 times faster than the global economy, it said. (Reuters)

Source: www.businessworld.ie