Trade, the lifeblood of the world economy, is growing at its slowest rate in seven years and could falter even more should anti-globalisation sentiment encourage governments to throw up more barriers, the World Trade Organisation says.
The WTO dramatically slashed its forecast for trade growth this year by about a third to its lowest rate since 2009, when the global economy was mired in recession after the financial crisis.
In an update to its forecasts on Tuesday, the world's leading trade body said anti-globalisation sentiment could make matters worse, especially if policymakers respond in what it called a "misguided" manner.
The Geneva-based WTO predicted that global trade will rise only 1.7 per cent this year, down from its April prediction of 2.8 per cent.
It said the downgrade, which came as the WTO opened a three-day forum about ways to make trade more inclusive, was largely due to an unexpectedly sharp drop in merchandise trade volumes in the first quarter. Lower economic growth and trade in developing countries like China and Brazil as well as a deceleration in imports in North America lay at the heart of the sharp downgrade.
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If the WTO's forecast comes true, it will be the first time in 15 years that global trade grows more slowly than the world economy, which it expects to expand by 2.2 per cent.
"The dramatic slowing of trade growth is serious and should serve as a wake up call," WTO director-general Robert Azevedo said. "It is particularly concerning in the context of growing anti-globalisation sentiment".
"We need to make sure that this does not translate into misguided policies that could make the situation much worse,'' he added, referring to job creation and economic growth.
As well as reducing its 2016 forecast, the WTO cut its projections for next year to between 1.8 per cent and 3.1 per cent from 3.6 per cent.
