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Global trade growth is expected to be lower in 2019 than that in 2018 because of the on going trade spat between China and the United States. The World Trade Organisation (WTO), citing widespread global tensions and economic uncertainty, forecast on April 2, 2019 that global trade growth is expected to be lower in 2019 than it was last year.
In its preliminary estimates, the WTO had predicted a 3.7 per cent expansion of trade for 2019. Now, it has revised that down to 2.6 per cent marking a decline on the 3.0 per cent growth recorded in 2018. WTO director-general Roberto Azevedo told in Geneva, "The fact that we don't have great news today should surprise no one who has been reading the papers over the last 12 months."
The 164-member WTO, in its main annual forecast, renewed its concerns about systemic threats that could disrupt world economy. This is notably because of the retaliatory tariffs between China and the United States. There are indications that ongoing talks between Washington and Beijing could resolve the bruising tariff battle. But timelines for a possible deal in this respect are not clear. Azevedo said, "There will be many losers" because of the trade battle, when asked if he saw either side emerging victorious in the trade spat between the world's two largest economies. It is, therefore, becoming increasingly urgent that tensions are resolved at the earliest.
The WTO projected a year back that trade growth would be 4.4 per cent for 2018. The fact that the final number was 1.4 per cent lower than the initial estimate highlights the considerable downside risks plaguing the world economy. The downside risks again outweigh the upside potential for this year, 2019. But a relaxation of tensions, especially the lifting of restrictive trade measures, could see 2019 beat the projections. WTO economist Coleman Nee told that the projections released on April 2, 2019, are based on a "relatively smooth" Brexit playing out over the next two years. Britain's leaving the European Union (EU) without a withdrawal agreement or the various other possible Brexit scenarios will impact global trade. But Nee added that "the situation is so fluid". Before fully understanding Brexit's influence on world trade, "We will have to wait and see what the final outcome is", he said.
The WTO, since its inception, is continuously at work on creating a level playing field in global trade-particularly among the developed and developing countries. But it is now pretty well known that the global trade body has been facing unprecedented criticism from President Donald Trump's administration. There is clearly a note of mistrust and indignation against the core principle of rule-based multilateralism on which the WTO was founded. The WTO Director General, however, keeps stressing the need for nations to work together to improve global trade climate. But it is also true that when tensions mount, countries tend to try to go on their own.
Sarwar Md Saifullah Khaled is a retired Professor of Economics, BCS General Education Cadre.