Surprise! Global trade is bouncing back after a sharp slowdown last year.
The World Trade Organization said Wednesday it expects the value of goods shipped around the globe to grow by around 2.4% in 2017, up from just 1.3% in 2016. The forecast takes into account inflation and currency movements.
But the good news comes with a caveat: the recovery will be much weaker if President Trump’s America First and other protectionist polices are adopted, the WTO warned.
“If policymakers attempt to address job losses at home with severe restrictions on imports, trade cannot help boost growth and may even constitute a drag on the recovery,” said Roberto Azevedo, director general of the WTO.
The WTO said trade growth may be as little as 1.8% this year, or as high as 3.6%, depending on policies governments choose to implement.
Trump isn’t alone in advocating trade policies to protect jobs at home. Right-wing politician Marine Le Pen in France is running for president on a campaign to put French workers first.
Meanwhile, Brexit means Britain faces new barriers in selling into its biggest export market, the European Union.
Trump has already pulled the U.S. out of one vast trade deal in the Pacific, promised to renegotiate the NAFTA agreement with Canada and Mexico, and threatened to slap tariffs or taxes on imports.
In March, the G20 group of the world’s biggest economies dropped a long-standing endorsement of free trade.
Azevedo admitted that free trade can cause “some economic dislocation in certain communities,” but said the advantages in terms of boosting economic growth are much more significant.
The head of International Monetary Fund, Christine Lagarde, said on Wednesday that one of the biggest risks facing the global economy is “the sword of protectionism hanging over global trade.”
The WTO said there were two reasons for the unusually weak trade growth last year. It said that investment spending slumped in the U.S.
Meanwhile, China continued to shift its economy away from relying on exports to a new model based on consumer spending. And the demand for imports in China has declined, as the country sources more goods domestically.