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WTO: Global trade growth is strong but escalating conflict threatens

UNITED STATES (OBSERVATORY) –¬†World trade in goods will grow 4.4 percent this year, keeping the pace of a rapid recovery that could dissipate if trade tensions see further escalation, the World Trade Organization said in its annual forecast on Thursday.

World trade growth remained stagnant for 10 years after the financial crisis and averaged 3 percent a year, the group said. But global trade growth last year was 4.7 percent, well above the 3.6 percent estimate for September and the expected 4 percent growth for 2019.

“But this important progress could soon be undermined if governments resort to restrictive trade policies, especially in a confrontation that could lead to an uncontrollable escalation,” WTO Director-General Roberto Azevedo said in a statement.

“The last thing the world economy needs is to start a cycle of response. The best way to address the pressing business problems facing WTO members is through teamwork. I urge governments to exercise restraint and resolve their differences through dialogue and serious engagement.”

World Trade Organization (WTO) forecasts for 2018 set global trade growth at the highest range for the organization’s previous estimates since it said in September it expected a growth rate of 1.4 to 4.4 percent for 2018, with a 3.2 percent growth rate likely.

The OECD said it had adjusted its latest forecast to a range of 3.1 to 5.5 percent based on current GDP projections, but “continued tightening of restrictive trade policies could result in a much lower rate of growth.”

“Those expectations do not take into account the possibility of a major escalation of trade restrictions,” Azvedo told a news conference.

“It is not possible to estimate the effects of a major escalation accurately. But it is clear that they may be dangerous. The poorest countries will be the biggest losers.”