WTO slashes forecast for trade growth as conflicts mount

The WTO said that conflicts between the United States and China could weigh on global trade. Above, a woman looks at toys made in China at a store in Los Angeles, California on September 13, 2019. (AFP)
Updated 01 October 2019

WTO slashes forecast for trade growth as conflicts mount

  • ‘Trade conflicts pose the biggest downside risk to the forecast but macroeconomic shocks and financial volatility are also potential triggers for a steeper downturn’

BRUSSELS/BERLIN: The World Trade Organization cut its forecast for growth in global trade this year by more than half on Tuesday and said further rounds of tariffs and retaliation, a slowing economy and a disorderly Brexit could squeeze it even more.

The WTO said it now expected global merchandise trade to increase by 1.2 percent this year, compared with its April estimate of 2.6 percent. That growth was 3.0 percent in 2018. For 2020, growth 2.7 percent is forecast, down from a previous estimate of 3.0 percent.

“The darkening outlook for trade is discouraging, but not unexpected,” WTO Director-General Roberto Azevedo said in a statement, urging WTO members to resolve trade disagreements and cooperate to reform the WTO.

The Geneva-based body said its reduced forecasts reflected estimates for slower expansion of the global economy, partly due to trade tensions, but also because of cyclical and structural factors and, in Europe, Brexit-related uncertainty.

The WTO gave a forecast range for trade growth this year of 0.5 percent to 1.6 percent and for 2020 of 1.7 percent to 3.7 percent, with the upper end of the ranges reachable if trade tensions eased.

“Risks to the forecast are heavily weighted to the downside and dominated by trade policy,” the WTO said.

The United States and China have been locked in a trade war for over a year. They have levied punitive duties on hundreds of billions of dollars of each other’s goods, roiling financial markets and threatening global growth.

US President Donald Trump has also imposed tariffs on products from other countries, notably on steel and aluminum, in a bid to cut the trade deficit of the world’s largest economy. The WTO figures implied he had had limited success.

The WTO said on Tuesday that North America showed the fastest growth of exports of any region in the first half of the year, at 1.4 percent, although the rise of imports into North America were also greater than elsewhere, at 1.8 percent.


Oil prices fall but losses limited by Brexit deal hopes

Updated 39 min 4 sec ago

Oil prices fall but losses limited by Brexit deal hopes

  • US retail sales in September fell for the first time in seven months adding to economy fears

LONDON: Oil prices fell on Thursday as industry data showed a larger than expected increase in US inventories but losses were limited after Britain and the EU announced they had reached a deal on Brexit.

Global benchmark Brent crude was down 37 cents at $59.05 in afternoon London trade while US WTI crude was also down 37 cents, at $52.99.

US crude inventories soared by 10.5 million barrels to 432.5 million barrels in the week to Oct. 11, the American Petroleum Institute’s weekly report showed, ahead of official government stocks data.

Analysts had estimated US crude inventories rose by 2.8 million barrels last week.

“US sanctions imposed on Chinese shipping company COSCO are seriously denting demand for imported crude ... This has a profound impact on US crude oil inventories as reflected in last night’s API report,” said Tamas Varga, an analyst at PVM Oil Associates.

“US refinery maintenance is not helping to reverse the current trend and further builds in US crude oil inventories can be expected in the next few weeks.”

The US imposed sanctions on COSCO Shipping Tanker (Dalian) and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management for allegedly carrying Iranian oil.

Adding to concerns about the global economy — and therefore oil demand — data from the US showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity.

Nevertheless, Brexit developments helped limit oil’s decline. Prime Minister Boris Johnson said Britain and the EU had agreed a “great” new deal and urged lawmakers to approve it when they meet for a special session at the weekend.

Analysts have said any agreement that avoids a no-deal Brexit should boost economic growth and oil demand.

However, the Northern Irish party whose support Johnson needs to help ratify any agreement, has said that it refused to support the pact.

Hopes of a potential US-China trade deal also supported oil. The commerce ministry in Beijing said China hoped to reach a phased agreement with Washington as early as possible.

But the German government has lowered its 2020 forecast for economic growth to 1 percent from 1.5 percent, the economy ministry said. It said Germany, Europe’s largest economy, was not facing a crisis.