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The World Trade Organization has cut its 2016 forecast for growth of global trade by over one third, reflecting a China slowdown and the dropping import levels entering the United States.
The adjusted figure released by the WTO was 1.7%, which is down from its estimate previously of 2.8% during April. It marked just the first time over the last 15 years that international commerce is expected to lag behind in growth of the world economy, said the WTO.
The figures are a wake-up call for world governments, said Roberto Azevedo the Director General of the WTO, said in an outlook report released on Tuesday.
The new data underlined the concerns that, following a long time of growth through the world’s globalization and the reliance on trade, governments are seeking more and more to protect their industries and promote producers that are domestic at the expenses of their foreign competitors.
Although governments deny this protectionism, trade no longer is outpacing the economic growth, as was once the case. Trade has increased 1.5 times faster than that of gross domestic product in the long term and twice as fast during the 1990s when the rate of globalization increased.
In 2016, trade is expected to grow just 80% as fast as the world economy, said the WTO, which is the first reversal for globalization since 2001 and just the second time since 1982.
The benefits involved with trade need to be shared on a wider basis, said Azevedo and it is not the time to turn inward.
He added that a system needs to be in place where poor countries are included as well as small companies, marginalized groups along with entrepreneurs, which appears to be a nod toward the activists of anti-globalization who said that trade talks held in secret are aimed exclusively at helping the bigger businesses.
Azevedo added that four of the five job losses across industrialized countries were not because of competition from less expensive imports, but because of efficiency and automation campaigns that have allowed companies to cut back on their workforce.
Cecilia Malmstrom the Commissioner for European Trade said trade must be valuable, efficient and transparent.
A number of people do not feel like they are included in debates over trade policy any longer, said Malmstrom and there is a growing movement for anti-globalization. Fears and questions remained and the figures released, said the commissioner are reason for concern.