October 21, 2016
Manufacturing and Trade News: A Gloomy Outlook for Growth
In late September the World Trade Organization (WTO) revised its previous forecast for global trade for both 2016 and 2017, reducing its growth estimates to 1.7% and 1.8%, respectively. This presents a stark contrast its projection from a year ago, which estimated that trade would expand by 3.9% this year.
And with global GDP expected to grow 2.2%, the WTO notes that 2016 will mark the “slowest pace of trade and output growth since the financial crisis of 2009.” Several issues were presented as possible causes of the diminished outlook, including Brexit’s long shadow, financial volatility in developed countries and the possibility that anti-trade rhetoric will impact trade policy.
The International Monetary Fund’s (IMF) recent World Economic Outlook report was similarly stark, stating that the volume of world trade has “grown by just over 3% a year since 2012, less than half the average rate of expansion during the previous three decades.” The Fund, which in July had forecast 2.2% economic growth for the United States in 2016, revealed concerns regarding U.S. trade and manufacturing, weakening its predicted U.S. growth to just 1.6%.
In the midst of this global trade slump, and looking out onto a horizon of disappointingly slow growth, the leader of the IMF, Christine Lagarde, stated that trade restrictions would leave U.S. workers and families “worse off.” She also warned that “to turn our back on trade now” would “[choke] off a key driver of growth.”
However, all is not lost. As detailed by U.S. News, the strong dollar and weak outlook on global growth may mean that we can expect U.S. manufacturing to “flatline.” However, they estimate that service industries and construction may step as leaders to propel the economy forward.