WTO has sharply downgraded its global trade outlook for 2025, now projecting a 0.2% decline in merchandise trade instead of the previously forecasted 2.7% growth. This deterioration is largely attributed to escalating U.S. tariffs under President Trump and intensifying trade tensions with China, which could lead to an 81% drop in bilateral trade between the two nations. The WTO warns that this decoupling risks fragmenting the global economy into rival blocs, potentially reducing global GDP by up to 7% in the long term. Smaller and emerging economies, which rely heavily on international trade, are expected to be the most affected.
https://www.cnbc.com/2025/04/16/global-trade-outlook-for-2025-has-deteriorated-sharply-wto-warns.html
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The WTO’s sharp downgrade of its global trade outlook for 2025 from 2.7% growth to a 0.2% decline signals a significant shift in the global economic climate, primarily driven by rising protectionism and geopolitical tensions. In addition, this trend is especially troubling for smaller and emerging economies, which often lack the domestic markets or financial resilience to weather such disruptions. A shift toward economic blocs could marginalize these countries, deepening inequalities and slowing their development. The WTO’s warning of a potential 7% hit to global GDP underlines just how high the stakes are not just for trade, but for global economic stability and cooperation. Overall, for smaller and emerging economies, this could mean fewer opportunities, reduced foreign investment, and heightened vulnerability to external shocks.
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