Apart from the existing tariff rows which pose “the biggest downside risk to the forecast,” the report says that macroeconomic shocks and financial volatility are also potential triggers for a steeper downturn.

“Beyond their direct effects, trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards,” said the WTO’s director general Roberto Azevodo. “Job creation may also be hampered as firms employ fewer workers to produce goods and services for export,” he added.

Washington and Beijing have been embroiled in the trade conflict for more than one year. The sides are currently trying to hammer out a deal, however, the last time they were close to a truce it was called off last minute and resulted in even higher tit-for-tat tariffs.

Meanwhile, the WTO is also concerned about trade friction between South Korea and Japan, which it says shows no signs of a turnaround. Relations between the two Asian powers turned sour in July, when Tokyo tightened export restrictions on hi-tech materials, used in displays and chips, to South Korea. Japan later excluded South Korea from a preferential list of trusted trade partners, prompting Seoul’s anger and a tit-for-tat response as it removed Japan from a list of nations receiving preferential treatment in trade.