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WTO chief economist sees China as an important driver of global trade

GENEVA (XINHUA) – Chinese economic recovery from the impact of the COVID-19 pandemic will be an important factor in driving world trade growth, said chief economist of the World Trade Organization (WTO) Ralph Ossa in a recent interview with Xinhua.

On Wednesday, the WTO published the 2024 edition of the Global Trade Outlook and Statistics report, forecasting a 2.6 per cent increase of world merchandise trade in 2024, with exports to increase by 3.4 per cent and imports by 5.6 per cent in Asia.

China is going to be an “important driver” of global trade, said Ossa. And China’s visa-free travel policy for some European countries and the recovery of Chinese outbound tourism are conducive to global service trade. According to the report, the volume of world merchandise trade fell by 1.2 per cent in 2023. Ossa believes that Europe’s weak trade performance is one of the main reasons behind the decline.

“We believe that inflation and also high energy prices are an important part of the story. Because if prices are high, if interest rates are high, then consumers and firms often want to postpone their consumption decisions,” said Ossa.

Although indices of new export orders point to improving trade conditions at the start of 2024, Ossa warned that regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the recovery. “Some governments have become more skeptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations,” said Ossa.

The resilience of trade is also being tested by disruptions on two of the world’s main shipping routes – the Panama Canal, which is affected by freshwater shortages, and the diversion of traffic away from the Red Sea.

Ossa calls for reducing trade policy uncertainties to consolidate global trade recovery.

“World trade policy is not just about trade policy, but it’s also about trade policy expectations… firms are not going to invest in exporting or importing if they cannot be sure that low tariffs are going to prevail tomorrow,” he said.