Global trade grows at its worst rate since the great crisis

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Global trade slows at a faster pace since the great financial crisis. The trade war stalks the biggest global growth engine. The WTO report shows a negative sentiment for 2019 if the situation does not reverse.

Global trade begins to deplete its growth. The latest reports that show the economic activity produced by international trade, in turn, show a clear slowdown in international trade and the number of transactions, which is already growing at its worst growth rates since the great financial crisis.

According to data released by the World Trade Organization (WTO), global trade forecasts for the coming years are not as good as expected. Although, a priori, high growth rates were expected for the coming years, the deterioration in the balance of risks has caused a further slowdown.

In turn, the economic slowdown that the world is experiencing. An economic slowdown that is dragging down all growth forecasts of the main developed economies that make up the planet, completely aggravates the situation, since we must bear in mind that one of the main growth engines of the world economy is trade global.

All this, we must not forget, is preceded by tensions and protectionist booms in certain countries. The drums of the trade war and continuing protectionist tensions from the United States and China have ultimately weakened trade transactions and free trade agreements. Although both countries are in negotiations, the solution that restores normality to trade has not yet been found.

Negotiations continue

The US government has already sat down with the Chinese government on several occasions. Despite the innumerable differences that separate the two countries, both governments try to seek, through negotiations, common links that bring together the commercial interests of their respective countries, as well as those of the planet. The trade blockade that the world is suffering from such tensions not only punishes China and the United States.

Although it seemed like an impossible task, China is giving ground to the United States. Donald Trump's pressure on Beijing is already beginning to take effect, as we can see it in China's decisions not to use the currency devaluation to favor China's competitiveness in international trade. An action that, from Washington, they saw completely unfair.

Although the meeting was to take place at the end of March, it appears that the summit will have to be postponed. President Donald Trump is in no rush to negotiate. In fact, it has already publicly announced that the application of tariff barriers, as well as the negotiations, "will last as long as they have to last", and that they will go on for a long time. Some statements not very favorable for the global economy and trade, which is already noting the slowdown and weakening.

"Tariff barriers and negotiations will last as long as they have to last"

Donald trump

The figures are clear

According to the figures provided by the WTO report on international trade, this has grown at a rate of 1.5% during the last quarter of 2018. A figure that shows, as we have said, the worst growth rate for the global trade since the great financial crisis. In addition, according to the agency, the reports published in recent months do not foresee a very clarifying future for 2019.

Source: WTO, prepared by Economipedia

According to the reports that the agency shows us, the forecasts for next year are not as expected. Although some analysts from large institutions show optimism about the increases we have seen in terms of PMIs and commercial activities, the only action that can restore stability and normality to global trade is a trade agreement between China and the United States, where they are excluded all those tariffs that were applied this past year.

As we can see in the table, it shows the estimates made by the World Trade Organization on optimism or pessimism for global trade in the coming years. As we can see, the table shows a clear pessimism, weighing down all forecasts in a scenario where trade tensions and protectionism continue to be the priority.

The need for a solution

The reports that the agency shows indicate how, if trade tensions between the two leading economies are not corrected, the forecasts for international trade could undergo further downward adjustments for the coming years. Global trade is threatened and, if it continues, its activity will continue to decline.

Although there are major economic problems, such as the huge volumes of debt in certain countries, the world economy continues with all eyes on the trade war between China and the United States, as it continues to be the main unknown to be solved in this tortuous and difficult puzzle.

As we indicated at the beginning of the text, international trade has a great weight in economic growth. Such is its degree of importance that the International Monetary Fund predicted growth for the global economy of 4.2%, as long as the ideal conditions were met for global trade to continue expanding and gaining ground in the economies.

Now this economic growth, as well as global trade, is losing its flame. They are losing that growth that fueled an economy that is increasingly weakened and slowed down. A problem that, if not solved, could pave the way for future recessions for the global economy, the worst of disasters.

Tags:  opinion USA passes 

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