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10-year anti-record: global trade forecast worsens

The organization identified the key risk for the development of global trade relations

Photo: REUTERS / Denis Balibouse

The World Trade Organization (WTO) has more than doubled its forecast for world trade growth in 2019 amid the escalation of tension in trade relations between the United States and China, the largest economies in the world.

According to the WTO forecast, global trade in goods will increase by only 1.2% in 2019, that is, at the slowest pace in 10 years. Back in April-2019, the WTO expected growth of 2.6%. For comparison, in 2018, global trade in goods increased by 3%.

“The deterioration in the forecast for the trade sector is discouraging, but it did not come as a surprise. In addition to direct influence, trade conflicts increase uncertainty, which leads companies to delay investment in productivity improvements, which are crucial for improving living standards,” said WTO CEO Roberto Azevedo.

“The resolution of trade conflicts will allow WTO members to avoid additional costs,” Azevedo added. “The multilateral trading system remains the most important global platform for resolving disagreements and making decisions in response to modern problems of the global economy.”

The forecast for 2020 is also worsened from 3% to 2.7%. At the same time, the report notes that bearish risks remain high and the forecast for the next year depends on the restoration of normal trade relations.

In addition, according to the WTO forecast, the global economic growth rate in both 2019 and 2020 will amount to 2.3% (April forecast — 2.6%).

Recall earlier, the International Monetary Fund (IMF) published a report on the prospects for the global economy, updating the data on countries. In the July report, “Prospects for the Development of the World Economy,” the IMF once again worsened the forecast for global economic growth. And, although the change in the forecast compared to the previous April report is small — only minus 0.1%, the IMF is not worsening the forecast for the first time. That is, the global economy continues to deteriorate faster than expected.

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