WTO blames tariff wars as it slashes global trade forecast
The World Trade Organization (WTO) has slashed its forecast for global trade this year to below half its previous estimate, pointing the finger at the US-China tariff war and also blaming Brexit.
In a report into global trade, WTO economists today warned that “further rounds of tariffs and retaliation” in the trade war “could produce a destructive cycle of recrimination”.
They predicted that world trade volumes would rise by just 1.2 per cent this year, far below their April forecast of 2.6 per cent growth. Trade is expected to grow by 2.7 per cent in 2020, down from three per cent previously.
WTO director general Roberto Azevedo said: “The darkening outlook for trade is discouraging but not unexpected.” He added that uncertainty caused by trade conflicts was leading businesses to delay “the productivity-enhancing investments that are essential to raising living standards”.
The organisation, which deals with the rules of trade between nations, said that due to the “uncertainty associated with trade forecasts under current conditions” trade growth could be as low as 0.5 per cent this year and 1.7 next year.
“Risks to the forecast are heavily weighted to the downside and dominated by trade policy,” the report said, as well as “Brexit-related uncertainty in the European Union”.
“A disorderly Brexit could have a significant regional impact, mostly confined to Europe,” it said.
Azevedo said that a resolution was vital given the threat to the global economy that trade wars pose. He said further trade tensions mean “job creation may also be hampered as firms employ fewer workers to produce goods and services for export”.
“Resolving trade disagreements would allow WTO members to avoid such costs,” he said, and urged states to use the organisation as a forum.
“”The multilateral trading system remains the most important global forum for settling differences and providing solutions for the challenges of the 21st-century global economy.”
“Members should work together in a spirit of cooperation to reform the WTO and make it even stronger and more effective.”
(Image credit: Getty)