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WTO cuts global trade forecast for 2018, 2019
THE World Trade Organization (WTO) on Thursday downgraded its global trade forecast for this year and next, pointing to escalating trade tensions around the world.
"Escalating trade tensions and tighter credit market conditions in important markets will slow trade growth for the rest of this year and in 2019," it warned in a statement. "Trade will continue to expand but at a more moderate pace than previously forecast".
The organisation now expects merchandise trade volumes to expand 3.9 per cent this year and 3.7 per cent in 2019, down from an April forecast of 4.4 per cent and 4 per cent growth, respectively.
It warned that it may have to cut its forecasts again because downside risks to its predictions "are considerable and heavily weighted to the downside".
The WTO's downgrade comes only days after US President Donald Trump's tariffs on another US$200 billion of Chinese imports took effect, with Beijing accusing Washington of "economic intimidation".
The latest volley against Beijing brings the amount of goods hit by duties to more than US$250 billion, roughly half of China's exports to the United States.
"While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners," WTO director general Roberto Azevedo said in the statement. "More than ever, it is critical for governments to work through their differences and show restraint," he added.
The WTO said that trade measures and threats since its last report in April were only having a "modest" economic effect for now, "but the uncertainty they generate may already be having an impact through reduced investment spending".
But the WTO did not blame trade spats alone for the downturn in international exchanges, saying that tightening monetary conditions in developed countries were also hurting trade, as currency values in poorer countries dropped, making it harder for them to pay for imports.
Analysts have notably cited rising US interest rates as a main factor in a recent meltdown of a string of emerging countries' currencies. AFP