Massive slowdown in global trade a 'wake-up call' warns WTO boss
Global trade this year will now grow at its slowest pace since 2009, according to the World Trade Organisation (WTO), with slowing trade growth in developing economies and the United States being blamed.
The body has dramatically downgraded its trade growth forecast for this year to just 1.7pc, well below its April forecast of 2.8pc.
The Geneva-based organisation warned the slowdown was "serious" and should serve as a "wake-up call". It comes just days after the Paris-based OECD warned that weak global trade was "of particular concern".
Next year's estimates have also been revised down. The WTO expects growth of between 1.8pc and 3.1pc, down from 3.6pc previously. "With expected global GDP growth of 2.2pc in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009," the WTO said.
It said the downgrade follows a sharper than expected decline in merchandise trade volumes in the first three months of this year, and a smaller than anticipated rebound in the second quarter.
The organisation said the contraction was driven by slowing GDP and trade growth in developing economies such as China and Brazil but also in North America.
"The dramatic slowing of trade growth is serious and should serve as a wake-up call," said WTO Director-General Roberto Azevêdo.
"It is particularly concerning in the context of growing anti-globalisation 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."
The WTO said that if the current projections hold true, it will be the first time in 15 years that the ratio between trade growth and world GDP has fallen below 1:1.
The data underlined concerns that, after a long period of growth through globalisation and reliance on global trade, governments are increasingly seeking to protect their own industries and promote domestic producers at the expense of foreign competitors.
Just last week the OECD warned that weak global trade was of "particualr concern". Its chief economist, Catherine Mann, said world trade was growing exceptionally slowly after the financial crisis, but has collapsed in 2015 and 2016.
Amid criticisms of rhetoric about global trade by US Presidential contender Donald Trump, Roberto Azevêdo said that while the benefits of trade are clear, it is also clear that they 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 marginalised groups in all economies. This is a moment to heed the lessons of history and re-commit to openness in trade, which can help to spur economic growth."