World Trade Organization warns of global trade slowdown

A quarterly leading indicator of world merchandise trade slumped to its lowest reading in nine years on Tuesday, which should put policymakers on guard for a sharper slowdown if trade tensions continue, the World Trade Organization ( WTO ) said on Tuesday.

The WTO’s quarterly outlook indicator, a composite of seven drivers of trade , showed a reading of 96.3, the weakest since March 2010 and down from 98.6 in November. A reading below 100 signals below-trend growth in trade .

“This sustained loss of momentum highlights the urgency of reducing trade tensions , which together with continued political risks and financial volatility could foreshadow a broader economic downturn ,” the WTO said in a statement.

The WTO forecast last September that global trade growth would slow to 3.7 percent in 2019 from an estimated 3.9 percent in 2018, but there could be a steeper slowdown or a rebound depending on policy steps, it said.

The quarterly indicator is based on merchandise trade volume in the previous quarter, export orders , international air freight , container port throughput , car production and sales , electronic components , and agricultural raw materials .

“Indices for export orders (95.3), international air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have shown the strongest deviations from trend , approaching or surpassing previous lows since the financial crisis ,” the WTO said.

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The index for container port throughput remained relatively buoyant at 100.3, but that may have been influenced by a front-loading of shipments before an anticipated hike in U.S.-China tariffs , the WTO said.

International trade tensions

could spike next month if the United States and China escalate their tariff war , a step that could have negative consequences for the world trading system , according to the United Nations trade agency UNCTAD .

A new round of U.S.-China talks will take place in Washington on Tuesday, with follow-up sessions at a higher level later in the week, the White House said on Monday, following a round in Beijing last week.

sg