GENEVA, Switzerland: The World Trade Organization on Tuesday revised down its 2016 global trade forecast by more than a percentage point, warning growth had hit its slowest pace since the global financial crisis.
WTO now estimates that global trade will expand by just 1.7 percent in 2016, compared to its April projection of 2.8 percent, and compared to a projection a year ago that trade would swell by 3.9 percent this year.
The UN agency also revised down its 2017 forecast, with trade now expected to grow between 1.8-3.1 percent, down from the previously anticipated 3.6 percent.
“With expected global GDP (gross domestic product) growth of 2.2 percent in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009,” WTO said in a statement.
It said the downgrade followed a sharper-than-expected decline in merchandise trade volumes in the first quarter, and a smaller-than-expected rebound in the second quarter.
The contraction, it said, was driven especially by slowing economic and trade growth in developing economies like China and Brazil.
But North America, which had showed the strongest import growth of any region between 2014 and 2015, was also hit by deceleration, WTO said.
“The dramatic slowing of trade growth is serious and should serve as a wake-up call,” WTO director general Robert Azevedo warned in the statement.
He voiced particular concern over the slowdown in the context of growing anti-globalization sentiment.”
“We need to make sure that this does not translate into misguided policies that could make the situation much worse, not only from the perspective of trade but also for job creation and economic growth and development which are so closely linked to an open trading system,” he said.
Azevedo cautioned against the negative impact of inequality.
“While the benefits of trade are clear, it is also clear that they need to be shared more widely,” he said.
“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,” he said.
“This is a moment to heed the lessons of history and re-commit to openness in trade, which can help to spur economic growth,” Azevedo said.