May 17, 2018 / 3:00 PM / in 3 months

WTO detects signs of tensions sapping global trade growth

GENEVA (Reuters) - Trade tensions may be starting to hold back global merchandise trade, the World Trade Organization said on Friday, as it published an outlook indicator showing growth was above trend this quarter but slowing down.

FILE PHOTO: The headquarters of the World Trade Organization (WTO) are pictured in Geneva, Switzerland, April 12, 2017. REUTERS/Denis Balibouse

The World Trade Outlook Indicator (WTOI), a composite published since the third quarter of 2016, showed a reading of 101.8 compared to 102.3 in February.

“The recent dip in the WTOI reflects declines in component indices for export orders in particular but also for air freight, which may be linked to rising economic uncertainty due to increased trade tensions,” the WTO said in a statement.

The WTO forecast in April that goods trade would grow by 4.4 percent this year after a decade averaging 3.0 percent, but it warned growth could be undermined if governments resorted to restrictive policies and a tit-for-tat battle.

“Risks to the trade forecast posed by rising trade tensions remain present,” the WTO said on Friday.

The WTOI includes seven components that serve as leading indicators of trade. One of them, export orders, slumped from a reading of 102.8 in February to a below-trend 98.1 in the latest indicator.

The reading for air freight also lost momentum in recent months, while container port throughput showed signs of plateauing and automobile sales and agricultural raw materials were both dragging down the overall reading, at 97.9 and 95.9 respectively, the WTO said.

But the index for electronic components rebounded to 104.2, from 94.1 in February.

Reporting by Tom Miles; Editing by Andrew Roche

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