The world’s trade is expected to grow at a much slower pace this year and next year than previously anticipated.
This is blamed on the "escalating trade tensions” and uncertainties around Brexit, according to the World Trade Organisation (WTO).
World trade in merchandise is expected to expand by only 1.2 per cent this year, less than half the rate of 2.6 per cent growth anticipated in April, the WTO said in a statement released on Tuesday morning.
World trade is forecast to reach 2.7 per cent next year, below the 3 per cent previously foreseen.
WTO Director-General Roberto Azevêdo said the darkening outlook for trade is discouraging but not unexpected.
"Beyond their direct effects, trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards,” he said.
WTO economists had warned during its annual forecast in April that systemic threats to global trade – notably retaliatory tariffs between China and the United States – would continue to hamper the flow of goods.
In September, US President Donald Trump increased tariffs on $112 billion worth of Chinese imports, threatening American consumers with higher costs for shoes, apparel and electronics.
As China slapped retaliatory tariffs on $75 billion of American imports, President Trump threatened to extend tariffs to $550 billion worth of Chinese imports.
The president last month delayed by two weeks a planned increase in tariffs on $250 billion worth of Chinese goods, momentarily restoring hopes for a trade deal. But many experts are doubtful about both sides reaching an agreement.
The United States and China are the world’s two largest economies, collectively comprising 40 per cent of the world’s annual output. As they are locked in conflict, every other trading nation is vulnerable to the effects.
Earlier last month, Uzziel Ndagijimana, the Minister for Finance and Economic Planning, had told The New Times that Rwanda’s economy was hardly affected by major global dynamics.
"We are not immune to the global trade impact, but it was minor compared to the global economy,” he said. "We have seen, for instance, our export revenues in the recent past slowing because of the reduction in international commodity prices.”
In April, the International Monetary Fund indicated that 70 per cent of the global would experience a slowdown in growth in 2019. That was shocking considering that two years ago, 75 per cent of the global economy had experienced an upswing.
WTO which deals with global trade rules of nations, warned that the increased slowdown would hamper job creation and make it hard for firms to produce goods and services for export markets.
Resolving trade disagreements, Azevêdo said, would allow WTO members to avoid such costs.
The WTO DG insisted that the multilateral trading system remains the most important global forum for settling differences and providing solutions for the challenges of the 21st century global economy.
"Members should work together in a spirit of cooperation to reform the WTO and make it even stronger and more effective,” he noted.
editor@newtimesrwanda.com