WTO downgrades world trade forecasts for 2018 and 2019
The World Trade Organization have cut their forecast for global commerce for 2018 and 2019 on Thursday due to negative effects coming from the trade tensions between China and the US.
The WTO forecast world trade in goods would grow by 3.9% this year, less than the 4.4% it forecast in April. Next year trade growth of 3.7% is was cut from the previous forecast of 4.0%.
Since April, the US has implemented its ‘America First’ protectionist measures including tariffs on hundreds of billions of dollars of imports from China which have been answered with tariffs of their own. This has lead to rising tensions between both nations.
The US has set tariffs on some European, Mexican and Canadian imports, creating tensions with its former trade allies. It has also threatened any country or business that has trade deals with Iran after US President Donald Trump decided to withdraw from the 2015 nuclear deal and impose tariffs on the country once again.
"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," the WTO statement said.
"While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners," the statement quoted Director-General Roberto Azevedo as saying.
The WTO also blamed the fall in growth on the effects of rising interest rates by major central banks. The report comes less than 24 hours after the US Federal Reserve raised its key rate for the third time this year, with another raise expected for December this year.