World trade is on track to expand by 2.4 percent this year, though there is “deep uncertainty” about economic and policy developments, particularly in the United States, the World Trade Organization (WTO) said on Wednesday.
The range for growth this year has been adjusted to between 1.8 and 3.6 percent, from 1.8 to 3.1 percent last September, it said, pointing to a risk that trade activity could be “stifled” due to lack of clarity about government policies.
“We should see trade as part of the solution to economic difficulties, not part of the problem,” WTO director-general Roberto Azevedo said.
“Overall cautious optimism but trade growth remains fragile and there are considerable risks on the downside. Much of uncertainty is political,” he told a news conference.
The world must “keep resisting the erection of new barriers to trade”, he said.
The WTO has repeatedly revised preliminary estimates over the past five years as predictions of economic recovery prove overly optimistic.
Global trade grew by “an usually low” 1.3 percent in 2016, the slowest pace since the financial crisis, failing to match even its revised forecast of 1.7 percent of last September.
Emerging markets slowdown
“The poor performance over the year was largely due to a significant slowdown in emerging markets where imports basically stagnated last year, barely growing in volume terms,” Azevedo said.
In 2018, global trade is forecast to grow by between 2.1 percent and 4 percent in WTO’s latest analysis.
“A spike in inflation leading to higher interest rates, tighter fiscal policies and the imposition of measures to curtail trade could all undermine higher trade growth over the next two years,” it warned.
US President Donald Trump has made reducing US trade deficits a key focus of his economic agenda to try to grow American manufacturing jobs. He has taken particular aim at renegotiating trade relationships with China and Mexico.
He is considering an executive order to launch a trade investigation that could lead to supplemental duties in certain product categories, a Trump administration official told Reuters on Monday.
“If policymakers attempt to address job losses at home with severe restrictions on imports, trade cannot help boost growth and may even constitute a drag on the recovery,” Azevedo said in a statement.
Asked by reporters about US policies under Trump, he said that he waited confirmation of the new US Trade Representative (USTR).
“We are waiting to see the new trade team really in place, waiting for the new USTR to be confirmed so that we can have a more meaningful dialogue at this point in time we don’t have that. We are still waiting to see how the trade policy itself is going to shape up in the United States.”
Azevedo declined to comment on the upcoming French election, but said: “Uncertainty has a freezing effect on investments and therefore on economic growth and output.
“Getting over the election cycles is important particularly in the major economies so we have a clear view of what is coming, what the policies are. Predictability is extremely important for investments and economic growth.”