The World Trade Organization downgraded its outlook for global trade, signaling that trade is set to grow at a slower pace than the world GDP growth for the first time in 15 years.
The Geneva-based WTO forecast world trade to expand only 1.7 percent this year instead of 2.8 percent projected in April.
The forecast for 2017 was also lowered, with trade now forecast to grow between 1.8 percent and 3.1 percent, rather than 3.6 percent projected previously.
Merchandise trade volume had decreased 1.1 percent in the first quarter and rebounded only 0.3 percent in the second quarter. The contraction reflects slowing economic growth and trade in developing economies, the WTO said.
World imports stagnated in the first half of 2016, falling 1 percent in the first quarter and rising 0.2 percent in the second quarter. This translated into weak demand for exports of both developed and developing economies.
The WTO observed that some important downside risks have materialized since April forecast was issued. This included a period of financial turbulence that affected China and other developing economies early in the year, but which has since eased.
WTO Director-General Roberto Azevedo said, "The dramatic slowing of trade growth is serious and should serve as a wake-up call."
"It is particularly concerning in the context of growing anti-globalization sentiment," Azevedo said. This should not be translated into misguided policies that could make the situation much worse, he added.
The benefits of trade need to be shared more widely.
"We should seek to build a more inclusive trading system that goes further to support poorer countries to take part and benefit, as well as entrepreneurs, small companies, and marginalized groups in all economies," the WTO Chief said.
by RTT Staff Writer
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