World goods trade will grow 4.4 per cent this year, maintaining a rapid recovery that could nevertheless unravel if trade tensions escalate further, the World Trade Organization said in its annual forecast on Thursday.
Global trade growth was in the doldrums for a decade after the financial crisis, averaging 3.0 per cent a year. But last year it grew 4.7 per cent - much higher than the 3.6 per cent estimated in September - and a further 4.0 per cent rise is expected in 2019, the WTO said.
“However this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” WTO Director-General Roberto Azevedo said in a statement.
“A cycle of retaliation is the last thing the world economy needs. The pressing trade problems confronting WTO members is best tackled through collective action. I urge governments to show restraint and settle their differences through dialogue and serious engagement.”
The United States and China have threatened each other with tens of billions of dollars’ worth of tariffs in recent weeks, leading to worries that Washington and Beijing may engage in a full-scale trade war that could damage global growth and roil markets.
The WTO’s 2018 forecast puts world trade growth at the top end of previous expectations, since the organization said last September that it expected 2018 growth of 1.4-4.4 per cent, most likely around 3.2 per cent.
The latest forecast revises that range up to 3.1-5.5 per cent based on current GDP forecasts, but “a continued escalation of trade restrictive policies could lead to a significantly lower figure,” the WTO said.
“These forecasts do not, and I repeat, they do not factor in the possibility of a dramatic escalation of trade restrictions,” Azevedo told a news conference.
“It is not possible to accurately map out the effects of a major escalation, but clearly they could be serious,” he said. “Poorer countries would stand to lose the most.”