World merchandise trade volumes are now expected to rise only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April.
The projected increase in 2020 is now 2.7%, down from 3.0% previously.
The economists caution that downside risks remain high and that the 2020 projection depends on a return to more normal trade relations.
The updated trade forecast is based on consensus estimates of world GDP growth of 2.3% at market exchange rates for both 2019 and 2020, down from 2.6% previously.
Slowing economic growth is partly due to rising trade tensions but also reflects country-specific cyclical and structural factors, including the shifting monetary policy stance in developed economies and Brexit-related uncertainty in the European Union.
Macroeconomic risks are firmly tilted to the downside.
Due to the high degree of uncertainty associated with trade forecasts under current conditions, the estimated growth rate for world trade in 2019 is placed within a range of 0.5% to 1.6%.
Trade growth could fall below this range if trade tensions continue to build, or outperform it if they start to recede.
The range of likely values is wider for 2020, ranging from 1.7% to 3.7%, with better outcomes depending on an easing of trade tensions.
Risks to the forecast are heavily weighted to the downside and dominated trade policy.
Further rounds of tariffs and retaliation could produce a destructive cycle of recrimination.
Shifting monetary and fiscal policies could destabilize volatile financial markets.
A sharper slowing of the global economy could produce an even bigger downturn in trade.
Finally, a disorderly Brexit could have a significant regional impact, mostly confined to Europe.
In the first half of 2019, world merchandise trade was up 0.6% compared to the same period in the previous year.
This marks a substantial slowdown compared to recent years.
Exports of developed economies were up just 0.2% for the year-to-date, while those of developing economies were up 1.3%.
On the import side, developed economies recorded year-on-year growth of 1.1% while developing countries declined 0.4%.
Growth rates based on quarterly data may differ slightly from calculations based on annual statistics, but they should be of similar magnitude.
All geographical regions recorded positive year-on-year export growth in the first half of 2019 despite a substantial weakening of global demand.
North America had the fastest export growth of any region at 1.4%, followed South America at 1.3%, Europe at 0.7%, Asia at 0.7%, and Other regions (comprising Africa, the Middle East and the Commonwealth of Independent States, including associate and former member States) at 0.1%.
North America recorded the fastest import growth of any single region at 1.8%, followed Europe at 0.2%.
Two regions registered declines (South America at -0.7% and Asia at -0.4%).
Collectively, the imports of Other regions grew faster than those of North America, at 2.4%.
Import demand has been particularly weak in Asia, weighing heavily on exporters of manufactured goods (e.g.
Japan, Korea, and Germany).
Exporters of natural resources have also seen demand for their products weaken, as evidenced the 12% year-on-year decline in commodity prices in August.
There are no comprehensive statistics on services trade in volume terms due to the general unavailability of price data, but an approximate measure of services trade volume can be derived adjusting nominal commercial services trade statistics to account for exchange rates and inflation.
This index shows that, like merchandise trade, commercial services trade has plateaued recently. ■
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