WTO cuts global trade growth forecast to 1.2%

The World Trade Organisation ( WTO), on Tuesday, cut global trade growth forecasts for 2019 to 1.2 per cent, from the earlier 2.6 per cent, mainly due to trade tensions and sluggish global economy.

This growth projection will not augur well for India, as it is struggling to increase its exports.

“Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020,” the organisation said in a statement.

World merchandise trade volumes are now expected to rise by only 1.2 per cent in 2019, substantially slower than the 2.6 per cent growth forecast made in April, it said.

It added that the global trade growth is projected to grow at 2.7 per cent in 2020, down from the previous projection of 3 per cent.

“Forecast risks are heavily weighted to the downside and dominated by trade policy. Further rounds of tariffs and retaliation could produce a destructive cycle of recrimination,” the WTO said.

WTO Director- General Roberto Azevedo said the darkening outlook for trade is discouraging but not unexpected.

"Job creation may also be hampered as firms employ fewer workers to produce goods and services for export," he said, adding “resolving trade disagreements would allow WTO members to avoid such costs”.

India's exports dropped by 6.05 per cent to $26.13 billion in August mainly on account of significant dip in shipments from key sectors.

Imports too declined by 13.45 per cent to $39.58 billion, narrowing trade deficit to $13.45 billion in August, according to the commerce ministry data.