GENEVA – The World Trade Organization lowered its 2019 and 2020 trade forecast considerably on Tuesday as a result of escalating trade tensions and a sluggish global economy.
WTO Economists said that trade volumes were expected to rise by only 1.2% in 2019, a sharp downturn from the previous 2.6% growth forecast.
Next year’s forecast has also been downgraded from 3% to 2.7% and experts have warned that the risk of a downward trend will remain high throughout 2020 unless trade negotiations and relations return to a more normal dynamic.
“The darkening outlook for trade is discouraging but not unexpected.
“Beyond their direct effects, trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards,” WTO Director-General Roberto Azevêdo said.
“Job creation may also be hampered as firms employ fewer workers to produce goods and services for export,” Azevêdo added.
The WTO advised that resolving trade disputes would allow its members to avoid incurring such costs.
In addition to trade tensions, country-specific cyclical and structural factors have also contributed to the slowing global economy.
Experts pinpointed specific political events such as Brexit and the subsequent uncertainty it fuels and changes to monetary policy in the developed world as further contributing factors to the gloomy forecast.
The economic and political volatility means that any trade forecast may fluctuate considerably depending on events and as such a projected 2019 growth range of between 0.5% and 1.6% was earmarked.
Trade growth could fall below this estimate if tensions continue, but it could also exceed the forecast if trade relations settle.
The forecast range for 2020 is even broader with growth being placed at anywhere between 1.7% and 3.7%.
“The multilateral trading system remains the most important global forum for settling differences and providing solutions for the challenges of the 21st Century global economy.
“Members should work together in a spirit of cooperation to reform the WTO and make it even stronger and more effective,” Azevêdo concluded.