WTO slashes global trade pre­dic­tion

The Myanmar Times - - International Business -

THE World Trade Or­gan­i­sa­tion has low­ered its global trade fore­cast, warn­ing that anti-glob­al­i­sa­tion rhetoric and Brexit were push­ing trade growth to its slow­est pace since the fi­nan­cial cri­sis.

The warn­ing comes as talks on a land­mark free trade deal be­tween the Euro­pean Union and the United States faces stiff op­po­si­tion and Bri­tain’s EU exit causes jit­ters.

The WTO said that global trade was now es­ti­mated to ex­pand by just 1.7 per­cent this year, com­pared to its April pro­jec­tion of 2.8pc.

The new fig­ure is also a far cry from a pro­jec­tion a year ago that trade would swell by 3.9pc this year.

De­scrib­ing it as “wake-up call”, the Geneva-based global trade body said growth had fallen to its slow­est pace in around seven years, when the global fi­nan­cial cri­sis hit.

“With ex­pected global GDP growth of 2.2pc in 2016, this year would mark the slow­est pace of trade and out­put growth since the fi­nan­cial cri­sis of 2009,” the trade body said.

Look­ing ahead, the WTO said sev­eral is­sues, in­clud­ing Brexit’s pos­si­ble im­pact, had now cast a shadow and it had re­vised down its 2017 fore­cast.

Trade is ex­pected to grow be­tween 1.8-3.1pc, down from the an­tic­i­pated 3.6pc, said the WTO, which sets the rules of global com­merce.

Also cloud­ing the out­look, the WTO said, is “the pos­si­bil­ity that grow­ing anti-trade rhetoric will in­creas­ingly be re­flected in trade pol­icy” as well as fi­nan­cial volatil­ity due to mon­e­tary pol­icy changes in de­vel­oped coun­tries.

“The re­cent run of weak trade and eco­nomic growth sug­gests the need for a bet­ter un­der­stand­ing of chang­ing global eco­nomic re­la­tion­ships,” the WTO state­ment said.

It warned that “creep­ing pro­tec­tion­ism”, cou­pled with lack­ing trade lib­er­al­i­sa­tion and per­haps the grow­ing role of the dig­i­tal econ­omy and e-com­merce, might help ex­plain the re­cent de­clin­ing ra­tio of trade growth to GDP growth.

Last week, the Paris-based Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment said Bri­tain – the world’s fifth-big­gest econ­omy – was poised to take a ma­jor hit next year from its de­ci­sion to leave the EU.

The WTO said the main im­pact of the shock vote in June had been on the value of the pound and noted that it had not sparked an im­me­di­ate eco­nomic down­turn.

But, it added, “Ef­fects over the longer term re­main to be seen. Eco­nomic fore­casts for the UK in 2017 range from fairly op­ti­mistic to quite pes­simistic.”

The WTO said the down­grade fol­lowed a sharper-than-ex­pected de­cline in mer­chan­dise trade vol­umes in the first quar­ter, and a small­erthan-ex­pected re­bound in the sec­ond.

The con­trac­tion was driven es­pe­cially by slow­ing growth in de­vel­op­ing economies like China and Brazil.

But, said the WTO, North Amer­ica, which showed the strong­est im­port growth of any re­gion be­tween 2014 and 2015, was also hit by de­cel­er­a­tion in economies.

“The dra­matic slow­ing of trade growth is se­ri­ous and should serve as a wake-up call,” WTO di­rec­tor gen­eral Robert Azevedo warned.

“It is par­tic­u­larly con­cern­ing in the con­text of grow­ing anti-glob­al­i­sa­tion sen­ti­ment,” he added, cau­tion­ing against this trans­lat­ing into “mis­guided poli­cies”.

Mr Azevedo also high­lighted the neg­a­tive im­pact of in­equal­ity.

“While the ben­e­fits of trade are clear, it is also clear that they need to be shared more widely,” he in­sisted.

“We should seek to build a more in­clu­sive trad­ing sys­tem that goes fur­ther to sup­port poorer coun­tries to take part and ben­e­fit, as well as en­trepreneurs, small com­pa­nies and marginalised groups in all economies,” he said. –

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