WTO cuts global trade growth fore­cast

Mul­ti­lat­eral or­ga­ni­za­tion says height­ened ten­sions may crimp prospects

China Daily (Latin America Weekly) - - 14 Business - By JING SHUIYU jing­shuiyu@chi­nadaily.com.cn

Es­ca­lat­ing trade ten­sions and tighter credit mar­ket con­di­tions will con­tinue to crimp global growth this year and for most of next year, the World Trade Orga- niza­tion said on Fri­day.

An­a­lysts said China and the United States, hav­ing been in­volved in tar­iff rhetoric for months, should go back to re­sult-ori­ented ne­go­ti­a­tions. Other­wise, es­ca­lat­ing con­fronta­tion could fur­ther un­der­mine world growth and have ad­verse ef­fects on both sides.

The lat­est WTO re­port an­tic­i­pates growth in mer­chan­dise trade vol­ume of 3.9 per­cent in 2018, with trade ex­pan­sion slow­ing fur­ther to 3.7 per­cent in 2019. The new fore­cast for 2018 is be­low the WTO’s April es­ti­mate of 4.4 per­cent but falls within the 3.1 per­cent to 5.5 per­cent growth range in­di­cated at that time.

“While trade growth re­mains strong, this down­grade re­flects the height­ened ten­sions that we are see­ing be­tween ma­jor trad­ing part­ners. More than ever, it is crit­i­cal for govern­ments to work through their dif­fer­ences and show re­straint,” WTO Di­rec­tor Gen­eral Roberto Azevedo said.

“The WTO will con­tinue to sup­port those ef­forts and en­sure that trade re­mains a driver of bet­ter liv­ing stan­dards, growth and job cre­ation around the globe,” he said.

Ris­ing trade ten­sions pose the big­gest risk to the fore­cast of fu­ture trade ex­pan­sion, while mon­e­tary pol­icy tight­en­ing and as­so­ci­ated fi­nan­cial volatil­ity could also desta­bi­lize trade and out­put, ac­cord­ing to the re­port.

The US has for the past sev­eral months been wield­ing a tar­iff stick against economies in­clud­ing the Euro­pean Union, Canada and China.

On Mon­day, new US ad­di­tional levies on $200 bil­lion worth of Chi­nese goods came into force, fol­lowed by Beijing’s tar­iffs on about $60 bil­lion worth of US im­ports. Prior to that, they have each raised tar­iffs on $50 bil­lion worth of each other’s goods.

The di­rect eco­nomic ef­fects of these mea­sures, ac­cord­ing to the WTO re­port, have been mod­est to date but the un­cer­tainty they gen­er­ate may al­ready be hav­ing an im­pact through re­duced in­vest­ment spend­ing.

Li Cheng, di­rec­tor of the Brook­ings In­sti­tu­tion’s John L Thornton China Cen­ter, said China and the US should re­turn to di­a­logue rather than “point fin­gers at each other”.

Wil­liam Zarit, chair­man of the Amer­i­can Cham­ber of Com­merce in China, agreed: “The best way (for the two coun­tries) for­ward is an im­mi­nent re­turn to re­sult-ori­ented ne­go­ti­a­tions.”

Trade ten­sions uni­lat­er­ally ini­ti­ated by the US ad­min­is­tra­tion will not only hurt other economies but also un­der­mine the in­ter­ests of US com­pa­nies, ac­cord­ing to a re­cent white paper re­leased by the Chi­nese govern­ment.

The white paper noted that Gen­eral Mo­tors, Ford Mo­tor and Fiat Chrysler Au­to­mo­biles have low­ered their full-year profit fore­casts due to es­ca­lat­ing tar­iffs. Gen­eral Elec­tric es­ti­mates that new tar­iffs on im­ports from China could raise over­all costs by $300 mil­lion-$400 mil­lion.

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