WTO cuts trade forecast by a third


Dollars and Yuan banknotesImage copyrightGETTY IMAGES

The World Trade Organization has cut its forecast for global trade growth this year by more than a third.

The new figure of 1.7%, down from its April estimate of 2.8%, would be the slowest pace of trade and output growth since the 2009 financial crisis.
It is also the first time in 15 years that international commerce has been left trailing behind the world economy.
The downturn reflects the slowdown in countries such as China and Brazil and lower levels of imports into the US.
Trade has grown 1.5 times faster than gross domestic product over the long term – but the WTO say it will only grow 80% as fast this year.
That would be the first reversal of globalisation since 2001 and only the second time this has happened since 1982.
WTO director-general Roberto Azevedo said: “The dramatic slowing of trade growth is serious and should serve as a wake-up call.
“It is particularly concerning in the context of growing anti-globalisation sentiment.

World Trade Organization headquarters in Geneva
Image captionThe World Trade Organization is based in Geneva and came into being in 1995

“We need to make sure that this does not translate into misguided policies that could make the situation much worse – not only from the perspective of trade, but also for job creation and economic growth and development, which are so closely linked to an open trading system.”

Analysis by Andrew Walker, BBC economics correspondent

Sluggish international trade growth is another symptom – and perhaps in part a cause – of the wider lacklustre global economic performance that has prevailed since the financial crisis.
Economic activity and trade have grown since its immediate aftermath, but not convincingly.
The WTO’s publication lists a number of possible factors behind the weakness.
Two of them are matters of government trade policy: the absence of further trade liberalisation and what the report calls “creeping protectionism”.
In principle, these are things that governments could address, by negotiating new trade deals and resisting calls for protecting industries against competition from imports.
But that runs up against the widely reported political backlash against globalisation.
Whatever the benefits that increased international economic integration might bring, some people don’t share in them and there are many people who are convinced they lose.

UK referendum

The WTO’s biggest downward revision to imports from its April forecast came in South America (-4.5% to -8.3%), the US (4.1% to 1.9%) and Asia (3.2% to 1.6%), but it predicted European imports would rise to 3.7% from 3.2%.
It added that the UK referendum result did not lead to an obvious downturn in economic activity, with its main impact being a drop in the value of the pound against the dollar and the euro.
It forecasts that growth will slow down in the UK in 2017, but that the country will not fall into recession.

Show More

Related Articles