The World Trade Organization (WTO) on Thursday lowered its outlook for global trade due to increasing trade tensions between important markets and tighter credit market conditions.
The Geneva-based organization now expects growth in merchandise trade volume of 3.9 percent in 2018. The agency expects growth to slow further in the next year to 3.7 percent.
The new forecast for 2018 is below the WTO’s previous estimate of 4.4 percent but falls within the 3.1 percent to 5.5 percent growth range indicated at that time. Trade growth in 2018 is now most likely to fall within a range from 3.4 percent to 4.4 percent.
WTO expects trade to continue to expand but at a more moderate pace than previously forecast.
WTO Director General Roberto Azev?do said, “While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners. More than ever, it is critical for governments to work through their differences and show restraint.
“The WTO will continue to support those efforts and ensure that trade remains a driver of better living standards, growth and job creation around the globe,” Azev?do added.
US President Donald Trump has started a trade dispute with China and has imposed a 10 percent import tariff on another $200 billion worth of goods made in China, bringing the total to more than $500 billion. China responded by enacting 25-percent tariffs on U.S. goods including vehicle imports.
Trump has warned to impose tariffs on virtually all Chinese goods if China does not back down.
In March, Trump also imposed 25 percent tariffs on steel imports and 10 percent on imported aluminum from the three trade zones in order to protect the U.S. steel industry.
“The direct economic effects of these measures have been modest to date but the uncertainty they generate may already be having an impact through reduced investment spending,” WTO said in a statement.