World trade will grow more slowly than expected in 2016, expanding by just 1.7 percent, well below the April forecast of 2.8 percent, according to the latest WTO estimates published on Tuesday.
With expected global GDP 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. The downgrade follows a sharper than expected decline in merchandise trade volumes in the first quarter and a smaller than anticipated rebound in the second quarter. The contraction was driven by slowing GDP and trade growth in developing economies such as China and Brazil but also in North America, which had the strongest import growth of any region in 2014-15 but has decelerated since then.
"The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalization sentiment," said WTO Director-General Roberto Azevedo.
"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," said Azevedo.
WTO predicted that trade may be picking up in the second half of 2016, although the pace of expansion is likely to remain subdued. The forecast for 2017 has also been revised, with trade now expected to grow between 1.8 percent and 3.1 percent, down from 3. 6 percent previously.
WTO said its outlook for the remainder of this year and next year is affected by a number of uncertainties, including financial volatility stemming from changes in monetary policy in developed countries, the possibility that growing anti-trade rhetoric will increasingly be reflected in trade policy, and the potential effects of the Brexit vote in Britain, which has increased uncertainty about future trading arrangements in Europe, a region where trade growth has been relatively strong.
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