WTO says global trade to grow 3.6% this year

There has been a resurgence of Asian trade flows, the WTO said. Above, a steel factory in Dalian, China. (Reuters)
Updated 21 September 2017
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WTO says global trade to grow 3.6% this year

GENEVA: Global trade is rebounding strongly but risks remain, the World Trade Organization said on Thursday, with commerce expected to grow by 3.6 percent in 2017, well above last year’s 1.3 percent.
The forecast marks a sharp upward revision of the WTO’s April estimate, when it foresaw growth of 2.4 percent and in a range of 1.8-3.6 percent, due to a high level of political and economic uncertainty.
That range has now been narrowed to 3.2-3.9 percent, based on accelerating economic growth and rising import demand in China and the US, 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 US 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 percent (the full range of the estimate being from 1.4 percent to 4.4 percent),” 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.


French state-owned bank drops plan to aid trade with Iran

Updated 24 September 2018
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French state-owned bank drops plan to aid trade with Iran

  • US-imposed sanctions sanctions iare making trade with Iran increasingly difficult for European companies - such as Volvo
  • US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers

PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.

Swedish truckmaker Volvo has been forced to stop assembling trucks in Iran as it can no longer get paid with US sanctions taking bite.
Volvo spokesman Fredrik Ivarsson said due to the sanctions Volvo could no longer get paid for any parts it shipped and therefore had taken the decision to not operate in Iran.
"With all these sanctions and everything that the United States put.. the bank system doesn't work in Iran. We can't get paid... So for now we don't have any business (in Iran)," he said.
The US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.