The World Trade Organisation (WTO) cut forecasts for global trade growth by over 50% on 1 October and warned of potential job cuts and reductions to living standards.This move took into account slow economic growth for most developed nations, the increase in trade wars, and also the likely impact of Brexit.
The WTO forecast for 2019 was slashed to 1.2%, down from the 2.6% trade growth forecast in April 2019.The forecast for global economic growth was also reduced from 2.6% to 2.3%.
Roberto Azevêdo is the Director-General of the WTO and he commented that many business organisations are putting new hire and business investment on hold due to the current uncertainties.
He says these factors are reducing business growth and also putting worker living standards at substantial risk.
He said: “The darkening outlook for trade is discouraging but not unexpected.Resolving trade disagreements would allow WTO member [states] to avoid such costs.”
Low Global Trade
The WTO based its forecasts on trade figures for the first six months of 2019 which showed global trade in merchandise had only increased by 0.6%, which is far lower than in previous years.
The organisation also warned total global trade volume growth could reduce to around 0.5% for the year, which would be the lowest increase for more than ten years, the agency warned that expansion in world trade volumes could slow to just 0.5% growth by the end of the year.
Even forecast growth of 1.2% would be the lowest seen in the past decade.
These revisions to the global forecasts are a double whammy for Europe which is already facing substantial trade uncertainty regarding Brexit.
It’s not yet known how they could impact on the US/China trade talks which will take place from 10 October.
However, analysts are unlikely to be holding their breath given the massive hike the US and China have already applied to goods exported between their respective countries, and the impacts these are causing on global stock markets.