World trade is on track to expand by 2.4 per cent this year, though there is “deep uncertainty” about economic and policy developments, particularly in the US, the World Trade Organisation (WTO) said.
WTO director-general Roberto Azevedo said that clarity was still needed on US President Donald Trump’s trade policies, while making a general appeal to resist protectionism.
The results of upcoming elections in major economies including France should provide more predictability for investors, he said.
The range for growth this year has been adjusted to between 1.8 and 3.6 per cent, from 1.8 to 3.1 per cent last September, the WTO said.
“We should see trade as part of the solution to economic difficulties, not part of the problem,” Azevedo said.
“Overall I think that while there are some reasons for cautious optimism, trade growth remains fragile and there are considerable risks on the downside. Much of the uncertainty around the outlook is political,” he told a news conference.
“We need to keep strengthening the system, delivering new reforms and resisting the erection of new barriers to trade.”
The WTO has repeatedly revised preliminary estimates over the past five years as predictions of economic recovery prove overly optimistic.
Global trade grew by “an usually low” 1.3 per cent in 2016, the slowest pace since the financial crisis, failing to match even its revised forecast of 1.7 per cent of last September.
“The poor performance over the year was largely due to a significant slowdown in emerging markets where imports basically stagnated last year, barely growing in volume terms,” Azevedo said.
In 2018, global trade is forecast to grow by between 2.1 per cent and 4.0 per cent in WTO’s latest analysis.
“A spike in inflation leading to higher interest rates, tighter fiscal policies and the imposition of measures to curtail trade could all undermine higher trade growth over the next two years,”it warned.
Trump has made reducing US trade deficits a key focus of his economic agenda to try to grow American manufacturing jobs. He has taken particular aim at renegotiating trade relationships with China and Mexico.
He is considering an executive order to launch a trade investigation that could lead to supplemental duties in certain product categories, a Trump administration official told Reuters on Monday.
“If policymakers attempt to address job losses at home with severe restrictions on imports, trade cannot help boost growth and may even constitute a drag on the recovery,” Azevedo said.
He awaited confirmation of the new US Trade Representative (USTR) nominee Richard Lighthizer – who has pledged an “America First” strategy to aggressively enforce US laws and trade deals to stop unfair imports and push China to scrap excess factory capacity.
“We are waiting to see the new trade team really in place, waiting for the new USTR to be confirmed so that we can have a more meaningful dialogue at this point in time we don’t have that.
“We are still waiting to see how the trade policy itself is going to shape up in the United States.”