Global trade growth loses steam

Dar es Salaam. World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018.

That was due to rising trade tensions and increased economic uncertainty, the World Trade Organisation (WTO) has said.

WTO economists expect merchandise trade volume growth to fall to 2.6 per cent in 2019 — down from 3 per cent in 2018.

Trade growth could then rebound to 3 per cent in 2020; however, this is dependent on an easing of trade tensions. This is partly explained by slower growth in the European Union, which has a larger share in world trade than in world GDP.

WTO director general Roberto Azevêdo said: “With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty.”

“It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today’s economy – such as the technological revolution and the imperative of creating jobs and boosting development.”

He said WTO members are working to do this and are discussing ways to strengthen and safeguard the trading system.

“This is vital. If we forget the fundamental importance of the rules-based trading system we would risk weakening it, which would be an historic mistake with repercussions for jobs, growth and stability around the world,” he said.

According to WTO report, trade growth in 2018 was weighed down by several factors, including new tariffs and retaliatory measures affecting widely-traded goods, weaker global economic growth, volatility of financial markets and tighter monetary conditions in developed countries, among others.