There is likelihood of a slowdown in global trade extending into the first quarter of 2019, predicted the World Trade Organization while releasing its latest World Trade Outlook Indicator (WTOI) on Tuesday. The global body also warned that the situation of global trade could deteriorate further in the near future.
“The simultaneous decline of several trade-related indicators should put policymakers on guard for a sharper slowdown, should the current trade tensions remain unresolved,” said the WTO in a statement.
The analysis of the WTO about the possibility of weakness in global trade extending into the first quarter of the current year is based on the most recent WTOI reading which stood at 96.3 and which is the lowest for the number since March 2010. The value of the indicator is also well below the baseline value of 100 for the index.
The report also highlighted a number of indices that have exhibited amongst the highest deviations from the normal which are also close to or gave gone past below the previous lows for those indices since the 2007-08 global financial crisis. Those indices include those for export orders at 95.3, international air freight at 96.8, automobile production and sales index at 92.5, electronic components index at 88.7 and agricultural raw materials index at 94.3.
The only one index that exhibited strong resilience amidst the lowering of most of the indices is the index for container port throughput which was at 100.3, showing good buoyancy against the common trend for other indices, the report showed. .
“Trade growth is currently forecast to slow to 3.7 percent in 2019 from an expected 3.9 percent in 2018, but these estimates could be revised downward if trade conditions continue to deteriorate,” said the WTO
However the WTO, through the WTOI report, said that there can be a very swift and strong turnaround in global trade if there is greater certainty and enhancement in the policy environment. Such environmental factors include the global business community obtaining greater clarity and certainty about Brexit deal and the negotiations between the US and China on trade manage to arrive at a conclusive agreement which could be enough to end the Sino-China trade war.
The aim of the designing of the WTOI is to offer “real time” information to people and businesses and policy makers on the path that the world trade would be taking at a certain period of time in comparison to the current trends. However the WTOI should not be used as a means to judge short-term economic outcomes even though near future trade growth is indicated by the figures, said the WTO. The main aim of the WTOI is to point out turning points in global trade and estimate impetus in growth of global trade.
(Adapted from XinhuaNet.com)