“The most recent WTOI reading of 96.3 is the weakest since March 2010 and below the baseline value of 100 for the index, signalling below-trend trade expansion into the first quarter. Weakness in the overall index was driven by steep declines in the component indices, which appear to be under pressure from heightened trade tensions. Indices for export orders (95.3), international air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have shown the strongest deviations from trend,” the statement read.
The WTO added that the existing trade trend should put policy makers “on guard” and warned of a possibility of further decline if current tensions remained unresolved.
“This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility could foreshadow a broader economic downturn. The WTO downgraded its trade forecast last September amid escalating trade disputes and tighter credit market conditions. Trade growth is currently forecast to slow to 3.7% in 2019 from an expected 3.9% in 2018, but these estimates could be revised downward if trade conditions continue to deteriorate,” WTO added.
In addition, the United States slapped multiple tariffs on various Chinese goods in order to fix its trade deficit with the country. China hit back with reciprocal tariffs on a number of US imports. Washington and Beijing have yet to resolve the issues, despite having completed several rounds of talks.