WTO says trade growth strong but at risk if conflict escalates
Trade in goods will grow 4.4% this year after a decade averaging 3% a year
World trade in goods is maintaining a robust recovery, but it still might falter if trade tensions escalate further, the World Trade Organisation (WTO) said in its annual forecast yesterday.
Trade in goods will grow 4.4 per cent this year after a decade averaging 3.0 per cent a year following the financial crisis. Last year it grew 4.7 per cent — much higher than the 3.6 per cent forecast in September — and a further 4.0 per cent rise is expected in 2019, the WTO said.
“However, this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” WTO DirectorGeneral Roberto Azevedo said in a statement. “A cycle of retaliation is the last thing the world economy needs.”
The United States and China have threatened each other with tens of billions of dollars’ worth of tariffs in recent weeks, leading to worries that Washington and Beijing may engage in an all-out trade war.
The WTO’s 2018 forecast puts world trade growth at the top end of previous expectations, since the organisation said last September that it expected 2018 growth of 1.4 to 4.4 per cent, most likely around 3.2 per cent.
The latest forecast raises that to 3.1 to 5.5 per cent based on current GDP forecasts, but “a continued escalation of trade restrictive policies could lead to a significantly lower figure,” the WTO said. “These forecasts do not, and I repeat, they do not factor in the possibility of a dramatic escalation of trade restrictions,” Azevedo told a news conference.
New trade restrictions could trigger cycles of retaliation that weigh on global trade and output.