The World Trade Organization (WTO) has cut its trade growth forecast for this year to the weakest level in a decade, warning that further rounds of tariffs could prove to be "destructive" for the global economy.
The volume of merchandise trade will increase by 1.2% in 2019 and 2.7% in 2020 after 3% growth in 2018, the WTO said in a report published Tuesday morning. The outlook has been sharply revised down from the WTO’s previous projections in April, when the Geneva-based organization predicted a 2.6% gain in global trade this year and 3% growth next year.
In its latest report, the WTO underscored the risks facing international commerce as the U.S. threatens more tariffs on Chinese imports and prepares new, WTO-sanctioned levies on goods from the European Union.
"Trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards. Job creation may also be hampered as firms employ fewer workers to produce goods and services for export," said WTO Director-General Roberto Azevedo said in written statement that accompanied the report.
The WTO report cited various risks to trade growth including rising trade tensions, Brexit-related uncertainty in the European Union and shifting monetary policy stances in developed economies. It’s the third consecutive year that the WTO has reduced its expectations for global trade growth and reflects similar forecasts from the World Bank and the International Monetary Fund. Last month, the Paris-based Organization for Economic Cooperation and Development (OECD) said the world’s intensifying trade conflicts have caused economic growth to dip to levels not seen since the financial crisis a decade ago.
