The total output of 246.7 million hectolitres was due in large part to steep drops in the top three wine producing countries: Italy, France and Spain.
In Italy production slumped 23 per cent to 39.3 mhl, while in France the drop was 19 per cent to 36.7 mhl.
Production in Spain fell 15 percent to 33.5 mhl, according to the Paris-based OIV, an intergovernmental organisation that provides scientific and technical advice on vines and wine.
However, the OIV noted that the forecast was based on US government estimates made before the outbreak of wildfires in California that ravaged two of the state's top wine producing areas: the Napa Valley and Sonoma County
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A six per cent increase in wine production to 13.9 mhl helped Australia to fifth place. It was the nation's third consecutive annual increase in output.
Argentina rebounded from a bad 2016 harvest, with output shooting up 25 per cent to 11.8 mhl. But it still has not recovered to its 2015 level.
There was no 2017 data available for China, which produced 11.4 mhl in 2016.