WTO cuts 2016 world trade growth forecast down to 1.7%

The World Trade Organization ( WTO) cut its forecast for global trade growth this year on Tuesday, reflecting a slowdown in China and falling levels of imports into the US.

The new figure of 1.7 percent, down from the WTO’s previous estimate of 2.8 percent in April, marked the first time in 15 years international commerce was seen lagging the growth of the world economy, the trade body said.

The figures should be a wake- up call for governments, WTO Director- General Roberto Azevedo said in the trade outlook report.

“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 as well as economic growth and development, which are so closely linked to an open trading system,” the report quoted him as saying.

The data underlined concerns that, after a long period of growth through globalization and reliance on global trade, governments are increasingly seeking to protect their own industries during a period of economic difficulty and economies are increasingly driven by domestic consumption.

Trade is no longer outpacing economic growth as it used to. Trade has grown 1.5 times faster than GDP over the long term, and twice as fast when globalization picked up in the 1990s.

This year trade will grow only 80 percent as fast as the global economy, the WTO said, the first reversal of globalization since 2001 and only the second since 1982.

Azevedo said the benefits of trade should be shared more widely, with a system that does more to include poor countries, small companies, marginalized groups and entrepreneurs.

The WTO also said it expected slower 2017 trade growth than in its previous forecast, with a rise of 1.8 percent to 3.1 percent rather than the 3.6 percent it estimated in April.