WTO cuts global trade growth forecast by over a third
The World Trade Organisation cut its forecast for global trade growth to 1.7% from its April estimate of 2.8%, which would mark the slowest pace of trade since the 2008 financial crisis.
It is the first time in 15 years that international commerce has trailed behind the rate of expansion in the world economy.
The fall reflects the slowdown in countries like China and Brazil as well as lower levels of imports into the US.
America registered the sharpest rate of growth in 2014-15, which had decelerated since then.
Demand for imports from developing economies dropped by 3.2% in the first quarter of 2016 before staging a small 1.5% bounce over the following three months.
Developed economies meanwhile imported 0.8% more in the first quarter, which then morphed into a 0.8% drop in the second quarter, the international trade watch-dog said.
The biggest downward revision to imports from its April forecast came in South America (-4.5% to -8.3%), the US (4.1% to 1.9%) and Asia (3.2% to 1.6%), but it predicted European imports would rise to 3.7% from 3.2%.
Trade has overtaken gross domestic product (GDP) by 1.5 times over the long-term but the WTO say it will only grow 80% as fast this year.
This marks the first reversal of globalisation since 2001 and just the second time since 1982.
WTO director-general Roberto Azevedo said: "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."
The organisation added that the Brexit vote did not lead to an obvious slowdown and its main effect was the devaluation of the point against the dollar and euro.
It forecast the UK will face a slowdown in growth in 2017 but the country will not fall into a recession.
"There are some indications that trade may be picking up in the second half of 2016, although the pace of expansion is likely to remain subdued. Container port throughput has increased, export orders have risen in the United States, and nominal trade flows in US dollar terms have stabilized, but numerous risks remain."