April 2 (UPI) — The World Trade Organization lowered its forecast Tuesday for global economic growth this year and next, mainly due to escalating trade conflicts and tariff penalties.
In an update to its forecast, the global trade body said worldwide growth will slow to 2.6 percent this year — down from the 3.7 percent the WTO projected six months ago. The 2.6 percent figure is the slowest growth forecast since 2016. A slightly more optimistic forecast for 2020, 3 percent, would hinge, the report said, on parties resolving trade conflicts, particularly between China and the United States. The updated forecast reflects similar scaled-down projections from the World Bank and International Monetary Fund.
The update Tuesday marks the second straight year the WTO has scaled back projections for global growth.
“No one should be surprised by this outlook,” WTO Director-General Roberto Azevêdo said in a statement Tuesday. “It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade, which responds to the real challenges in today’s economy.”
Nowhere is the challenge more evident than in the fight between Beijing and Washington, in which both sides have repeatedly imposed tariffs on foreign goods. Chinese Vice Premier Liu He will be in Washington to continue trade talks this week.
Tighter monetary conditions, especially in developing countries, have helped weigh down economic projections, the WTO said.
Worldwide merchandise exports totaled $19.5 trillion in 2018 — up 10 percent year-to-year. That was mostly driven by higher oil prices, the WTO said, which increased about 20 percent. Saudi Arabia oil exports grew 35 percent while Russian exports were up 25.6 percent.
The WTO update Tuesday precedes a similar update next week from the IMF, which already downgraded its initial forecast in January. The Organization for Economic Co-operation and Development lowered its global forecast last month.
The WTO report said the worst case scenario would see a reduction in world GDP of about 2 percent in 2022.
A complicating economic factor is Britain’s difficulty in settling on a trade deal for its coming departure from the European Union. British Parliament voted Monday on four motions for leaving the EU but none passed. Prime Minister Theresa May’s proposal has been rejected three times by lawmakers. Britain’s deadline to reach a departure deal is April 12.