According to the World Trade Organization, the overall world trade will expand by only 1.7 percent, well below April’s forecast of 2.8 percent.
For 2017, the revised estimate of growth is between 1.8 percent and 3.1 percecnt, down from 3.6 percent previously. With expected global GDP growth of 2.2% in 2016, last year marked the slowest pace of trade and output growth since the financial crisis of 2009.
A sharper decline was seen in merchandise trade volumes in the first quarter (-1.1% quarter-on-quarter, as measured by the average of seasonally-adjusted exports and imports) with a smaller than anticipated rebound in the second quarter (+0.3%).
The contraction was driven by slowing GDP and trade growth in developing economies such as China and Brazil but also in North America, which had the strongest import growth of any region in 2014-15 but has decelerated since then.
“The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalization sentiment. We need to make sure that this does not translate into misguided policies that could make the situation much worse, not only from the perspective of trade but also for job creation and economic growth and development which are so closely linked to an open trading system,” said WTO Director-General Roberto Azevêdo.
Azevêdo emphasised that the benefits of trade are needed to be translated more clearly worldwide to build a more inclusive trading system that goes further to support poorer countries to take part and benefit, as well as entrepreneurs, small companies, and marginalised groups in all economies.
“This is a moment to heed the lessons of history and re-commit to openness in trade, which can help to spur economic growth,” he said.