Trade Tensions Weighing On Global Trade Growth: WTO

Escalating trade tensions are a key factor that is producing a slowing of global trade growth, according to the World Trade Organization (WTO). The latest update of the WTO's World Trade Outlook Indicator (WTOI) came in at 96.3 as of December 2018, the lowest mark for the index that analyzes several principal drivers of trade. A WTOI reading of 100 represents baseline growth on par with the medium-term trend, while readings above or below that represent faster or slower than trend global trade growth. Weakness in the overall index was attributed to "steep declines" in most component indices, WTO said. "Indices for export orders (95.3), air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have all fallen below trend," it noted. Only the container port throughput index remained on trend with a reading of 100.3. Index values were lower year-over-year for all WTOI components, with the biggest declines seen for electronics, down 12.9 points, and automobile production and sales, down 10.3 points. Meanwhile, the ag raw materials index was down 5.1 points, year-over-year, with declines at or just under one point per month seen for October through December. Trade turmoil is the key issue weighing on global trade growth, according to WTO. The almost-across-the-board index declines "should put policy makers on guard for a sharper slowdown should current trade tensions remain unresolved," the trade body warned. "Conversely, greater certainty and improvement in the policy environment could bring about a swift rebound in trade growth." The U.S.-China trade war is perhaps the biggest present drag on global trade, with the two sides actively engaged in talks aimed at averting further escalation. The outcome of those negotiations remains uncertain with some signs that a final deal may still be a ways off.