Fogged up: Downside risks obscure trade outlook

The total trade 2011 forecast has been narrowed from 8-10% to 9-10%, but risks like sovereign debt in the US continue to be a concern.

Meanwhile the NODX forecast is revised downwards from 8 to 10 percent to 6 to 7 percent, according to International Enterprise (IE) Singapore.

International Enterprise (IE) Singapore noted:

These projections take into consideration the following factors:

a. The global economy is expected to register 4.3 percent growth in 2011
The IMF, in its latest June 2011 World Economic Outlook Update, expects the global economy to grow by 4.3 percent in 2011, revising marginally downwards its previous forecast of 4.4 percent growth.

b. Expected improvement in global electronics demand for the latter part of the second half of 2011
The first half of 2011 saw sluggish global electronics demand, due to the base effect of high sales in 2010 and Japan’s mishaps. Analysts expect global electronics demand to pick up in the latter part of second half of 2011 on stronger seasonal demand for electronic goods and introduction of new electronic gadgets.

c. Oil prices are expected to be around US$100 to US$110 per barrel
On average, oil prices are expected to be around US$100 to US$110 per barrel in 2011.

The outlook for the second half of 2011 is clouded by several downside risks. Slower than expected recovery in Japan will dampen global demand for electronics. Sovereign debt still remains a risk in the US and the EU 27. The high unemployment rate and depressed housing market in both economies also remain a worry.

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