WTO predicts strong outlook for trade growth over next two years

World merchandise trade got off to a good start in 2018 and, without any missteps, trade growth should remain strong over the next two years, according to the World Trade Organisation (WTO).

The WTO anticipates merchandise trade volume growth of 4.4% in 2018, measured by the average of exports and imports, and expects this to moderate to 4% in 2019.

This trade forecast was predicated on the consensus estimates of global GDP which have been revised upwards strongly in recent months.

“The strong trade growth that we are seeing today will be vital for continued economic growth and recovery and to support job creation,” said WTO director-general, Roberto Azevêdo.

“However this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation.”

In light of recent trade policy developments, he noted that risks to the forecast could now be considered to be tilted to the downside as faster monetary tightening by central banks could trigger fluctuations in exchange rates and capital flows which would disrupt trade flows.

Yet, there could still be some upside potential if structural reforms and more expansionary fiscal policies were adopted which would cause economic growth and trade to accelerate in the short run.

“The fact that all regions are experiencing upswings in trade and output at the same time could also make recovery more self-sustaining and increase the likelihood of positive outcomes,” said Azevêdo.

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