These revisions reflect a number of factors that weighed on the global economy in the first half of 2015, including falling import demand in China, Brazil and other emerging economies; falling prices for oil and other primary commodities; and significant exchange rate fluctuations.
Volatility in financial markets, uncertainty over the changing stance of monetary policy in the US and mixed recent economic data have clouded the outlook for the world economy and trade in the second half of the year and beyond.
If current projections are realised, 2015 will mark the fourth consecutive year in which annual trade growth has fallen below 3% and the fourth year where trade has grown at roughly the same rate as world GDP, rather than twice as fast, as was the case in the 1990s and early 2000s.
Catalyst for growth
“Trade can act as a catalyst for economic growth," WTO director general Roberto Azevêdo said. “At a time of great uncertainty, increased trade could help reinvigorate the global economy and lift prospects for development and poverty alleviation. WTO members can help to set trade growth on a more robust trajectory by seizing the initiative on a number of fronts, notably by negotiating concrete outcomes by our December Ministerial Conference in Nairobi."
Global output is still expanding at a moderate pace but risks to the world economy are increasingly on the downside.
These include a sharper-than-expected slowdown in emerging and developing economies, the possibility of destabilising financial flows from an eventual interest rate rise by the US Federal Reserve, and unanticipated costs associated with the migration crisis in Europe.