World trade shrank by 0.3 percent in the fourth quarter of 2018 and is likely to grow by 2.6 percent this year, the World Trade Organization (WTO) said in an annual report.
That is slower than the 3.0-percent growth of 2018 and below a previous forecast of 3.7 percent. Trade growth could rebound to 3.0 percent in 2020, the WTO said, adding that it will depend on an easing of trade tensions.
“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,” WTO Director-General Roberto Azevedo said.
Trade growth in 2018 was weighed down by several factors, including new tariffs and retaliatory measures, weaker global economic growth, volatility in financial markets, and tighter monetary conditions in developed countries.
The slowdown reflected weaker import demand in both developed and developing countries, although some regions were more strongly affected than others.
After recording strong increases in 2017, Asia saw its trade growth slow down in 2018. Europe’s exports stagnated throughout the year while its imports declined gradually.
WTO chief economist Robert Koopman has warned that it may get worse if US President Donald Trump goes ahead with a plan to impose high tariffs on global imports of cars later this year.
“US-China trade is about three percent of global trade. Automobile trade globally is about eight percent of global trade. So you can imagine that the impact of automobile tariffs is going to be bigger than the impact of the US-China trade conflict,” he said.