The World Trade Organisation (WTO) has predicted that global merchandise trade growth will remain strong in 2018 and 2019, but has cautioned that this momentum is contingent on the policy choices taken by governments.
This forecast was disclosed by WTO Director General, Roberto Azevedo, in a press conference held last week. According to Mr. Azevedo, global merchandise trade grew an estimated 4.7% in 2017 and is forecast by WTO economists to grow 4.4% in 2018 and by a more modest, 4.0% in 2019.
He noted that trade volume growth in 2017 was the most robust since 2011, with Asia being responsible for much of the recovery. He noted that South and Central America and the Caribbean made a positive contribution for the first time since 2013 due to Brazil’s economic recovery. The ratio of trade growth to GDP growth will be slightly lower in 2018 at 1.4 in 2018, down from 1.5 in 2017. Commercial services trade experienced strong growth in 2017 after two years of lacklustre growth.
The escalating global trade tensions, particularly between the US and China, cast a shadow over the forecast, as Director-General Azevedo strongly cautioned that continued positive trade growth could be “quickly undermined” if Governments turned to trade restrictive policies and engaged in retaliation. Mr. Azevedo pointedly stated that “a cycle of trade retaliation is the last thing the world economy needs”, noting that trade tensions may already be impacting business confidence and investment decisions. He further warned that missteps on trade and monetary policy “could undermine economic growth and confidence”.
In an appeal to WTO Member States to resort to the rules-based system as opposed to unilateral action, Mr. Azevedo added that “pressing trade problems confronting WTO Members is best tackled through collective action”.
The full WTO press release may be viewed here.
Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.