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WTO Warns Of Downturn

By Dr. Mike Campbell
Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.

The World Trade Organisation (WTO) is based in Geneva, Switzerland and was established in 1995 as a successor to GATT (General Agreement on Trade and Tariffs). All the existing membership of GATT became members of WTO and it now has 164 Member States in addition to observer nations (which should join within 5 years of attaining observer status). The UK has been a member of WTO since its inception, but all negotiations involving the UK at WTO fall under the collective agreements undertaken on behalf of its members by the EU.

The WTO has trimmed its forecast for global trade growth this year from 2.8% (April) to 1.7%, its worst level since 2009 during the Global Financial Crisis. The downgrade is in part due to slowdowns in Brazil and China, but also the US has seen a reduction in the level of goods which it imports.

The current projections indicate that international trade will see a smaller increase than global GDP for the first time in 15 years; it usually exceeds global GDP by 1.5 times, but is expected to decline to four fifths of the rate of GDP expansion this year. It is being flagged as the first “reversal” of globalisation since 2001 and only the second recorded such event since 1982. The organisation’s director-general, Roberto Azevedo noted: "The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalisation sentiment. We need to make sure that this does not translate into misguided policies that could make the situation much worse - not only from the perspective of trade, but also for job creation and economic growth and development, which are so closely linked to an open trading system."

WTO noted that the major impact of Brexit so far (which of course is yet to be initiated) has been a fall in the value of Sterling against other major currencies. It believes that UK growth will slow in 2017, but is predicting that the UK will avoid a recession. I think one can safely add the caveat that that depends on how the UK government proceeds with its “plans”. There is an increasing clamour for some clarity on what the UK wishes to achieve with Brexit (not least from UK businesses), but the PM has so far been unwilling to divulge her negotiating position.

Dr. Mike Campbell
About Dr. Mike Campbell
Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.
 

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