Escalating tariffs are taking a toll.
Rising trade tensions and a lagging global economy have led the World Trade Organization to cut its forecast for international trade growth by more than half, to the lowest level since the global financial crisis just over a decade ago.
statement on Tuesday . That would be substantially lower than the original 2.6% estimate in April and a far cry from 3% annual growth in 2018. The Geneva-based organization reduced its forecast for the second time this year, as export and import growth slowed worldwide in the first half of 2019. The WTO’s new report warned that slowing world trade volumes could adversely affect jobs and other business investment: “Job creation may also be hampered as firms employ fewer workers to produce goods and services for export,” Director-General Roberto AzevêdoThe WTO cited new tariffs coming into effect and a slower expansion of the global economy as key reasons for the slowdown. Further tariffs “could produce a destructive cycle of recrimination,” the report says. The WTO also highlighted a hard, no-deal Brexit as another potential threat to trade levels, especially in Europe. And with ongoing uncertainty over different central banks’ monetary policy, too, macroeconomic shocks and financial volatility were listed as “potential triggers for a steeper downturn.” International trade volumes could rebound slightly next year, according to the WTO, but remain dependent on a “return to more normal trade relations.” The projected increase in 2020 is 2.7%, slightly down from a prior 3% estimate. “The darkening outlook for trade is discouraging but not unexpected… trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards," said Azevêdo.
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