The World Trade Organization warned today that “escalating trade tensions and tighter credit market conditions in important markets will slow trade growth for the rest of this year and in 2019”. WTO now projects growth in global merchandise trade volume of 3.9% in 2018 and 3.7% in 2019. The 2018 figure is notably lower than April’s projection of 4.4%. Though, it still falls within April’s range of 3.1-5.5%. The new range is lowered to 3.4-4.4%.
It noted that some of the downside risks identified in April have materialized. These include “most notably a rise in actual and proposed trade measures targeting a variety of exports from large economies”. While the direct economic effects are “modest” but the uncertainty they generate may already be having an impact through reduced investment spending. In addition, it noted “monetary policy tightening in developed economies has also contributed to volatility in exchange rates and may continue to do so in the coming months.”
WTO Director General Roberto Azevêdo also warned “while trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners”.