The World Trade Organization, WTO, on Wednesday slashed its forecast for global merchandise trade from solid growth to a decline.
It said further US tariffs and spillover effects could lead to the heaviest slump since the height of the COVID pandemic.
WTO Director General, Ngozi Okonjo-Iweala expressed these concerns while speaking with reporters in Geneva.
The global trade body said it expected trade in goods to fall by 0.2% this year, down from its expectation in October of 3.0% expansion, adding that its new estimate was based on measures in place at the start of this week.
“I'm very concerned, the contraction in global merchandise trade growth is of big concern,” Okonjo-Iweala said.
Recall that US President Donald Trump imposed extra duties on steel and car imports as well as more sweeping global tariffs before unexpectedly pausing higher duties on a dozen economies.
Trump's trade war with China has also reportedly intensified with tit-for-tat exchanges pushing levies on each other's imports beyond 100%.
“If we have contraction in global merchandise the concern is spill over into broad GDP growth. We've seen that the trade concerns can have negative spill overs into financial markets, into other broader areas of the economy,” Okonjo-Iweala added.
The head of the WTO said her greatest fear was that the economies of China and the US were decoupling from one another.
