The World Trade Organization slashed its trade growth forecast for the year to the lowest reading in a decade, citing escalating trade tensions.
The trade body cut its projection for merchandise trade volume growth to 1.2% for 2019 from 2.6% projected in April, before the U.S. and China announced further rounds of tariffs.
For 2020, the WTO expects trade growth of 2.7%, down from 3.0% estimated previously, though the projection assumes trade relations improving to normal levels.
"Further rounds of tariffs and retaliation could produce a destructive cycle of recrimination," the WTO said.
Trade uncertainty has led some businesses to delay investments essential for raising living standards, said WTO Director-General Roberto Azevêdo. Job creation may also be impacted amid declining export and import growth rates.
The revised trade forecasts are based on "consensus estimates" of global GDP growth of 2.3% for 2019 and 2020, compared to 2.6% previously, reflecting intensifying trade tensions, the shifting monetary policy stance in developed economies and Brexit uncertainty.
"The balance of risk remains on the downside, with trade disputes, financial volatility and geopolitical tensions providing potential triggers for a steeper downturn," the WTO said.
