Global trade growth loses momentum as trade tensions persist: WTO

GENEVA, World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty. WTO economists expect merchandise trade volume growth to fall to 2.6% in 2019 down from 3.0% in 2018. Trade growth could then rebound to 3.0% in 2020; however, this is dependent on an easing of trade tensions.

WTO Director-General Roberto Azevedo said: “With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty. It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today’s economy � such as the technological revolution and the imperative of creating jobs and boosting development. WTO members are working to do this and are discussing ways to strengthen and safeguard the trading system. This is vital. If we forget the fundamental importance of the rules-based trading system we would risk weakening it, which would be an historic mistake with repercussions for jobs, growth and stability around the world.”

Trade growth in 2018 was weighed down by several factors, including new tariffs and retaliatory measures affecting widely-traded goods, weaker global economic growth, volatility in financial markets and tighter monetary conditions in developed countries, among others. Consensus estimates have world GDP growth slowing from 2.9% in 2018 to 2.6% in both 2019 and 2020.

The preliminary estimate of 3.0% for world trade growth in 2018 is below the WTO’s most recent forecast of 3.9% issued last September. The shortfall is mostly explained by a worse-than-expected result in the fourth quarter, when world trade as measured by the average of exports and imports declined by 0.3%. Until then, third quarter trade had been up 3.8%, in line with WTO projections.

Trade expansion in the current year is most likely to fall within a range from 1.3% to 4.0%. It should be noted that trade growth could be below this range if trade tensions continue to build, or above it if they start to ease.

Nominal trade values also rose in 2018 due to a combination of volume and price changes. World merchandise exports totalled US$ 19.48 trillion, up 10% from the previous year. The rise was driven partly by higher oil prices, which increased by roughly 20% between 2017 and 2018. The value of commercial services trade rose nearly as much, with exports totalling US$ 5.80 trillion in 2018, up 8% from the previous year.

Source: Emirates News Agency