The World Trade Organization said the rising tariff wars across the globe are posing a threat to living standards and jobs, while slashing the forecast for trade growth during 2019.
Having halved its growth forecast for trade in goods in 2019 from 2.6 percent to 1.2 percent, the WTO cited the burgeoning US-China trade war, a slowdown in global growth, and the fear of the consequences of a no-deal Brexit, as reasons for the change in the forecast.
The hostile environment dissuades businesses from spending money on purchasing new capital which makes it a hostile ground for innovation and growth, said Roberto Azevedo, Director General, WTO.
“Job creation may also be hampered as firms employ fewer workers to produce goods and services for export,” said Azevedo. “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.”
As the world’s two largest economies have issued tariffs on more and more products, talks to solve the dispute are soon to be underway in Washington. On the other hand, the US is stopping the appointment of new judges to the WTO body which decides if a nation’s appeal will be upheld against a trade dispute.
The WTO noted that the forecast had darkened since April and the bounce-back expectations of 2.7 percent for 2020 is also dependent on the trade wars drawing to a close.
The WTO said risks were “heavily weighted” to the downside and dominated by trade policy.