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The World Trade Organisation (WTO) has lowered growth projections for global trade in 2013 for the second time, but added that the conditions for improved trade were already falling into place.
WTO economists now predict growth in 2013 at 2.5 per cent against 3.3 per cent in April and the initial forecast of 4.5 per cent, an official release said on Thursday. The projection is still higher than the two per cent growth in world trade achieved in 2012.
The multilateral body blamed developing economies for the lower projections, stating that slower revival in imports was harming trade. It also expressed concerns about India’s economy still being in the midst of a sharp contraction.
The slow revival in demand for imports in developing economies has hindered growth of exports from developed and developing countries in the first half of 2013, and was the reason for the lower forecast, the economists said.
On a positive note, the WTO believes that the conditions of improved trade are already falling into place as encouraging data coming from Europe, the US, Japan and China suggest that the economic slowdown has bottomed out and a tentative recovery is underway. This is expected to be reflected in rising quarterly growth in the months ahead, the economists said.
While China’s industrial production suggests that the country may be regaining some of its dynamism, India’s economy is still in the midst of a sharp contraction, according to composite leading indicators calculated by the Organisation for Economic Co-operation and Development (OECD), the release added.
WTO has also lowered growth projections for 2014 to 4.5 per cent from five per cent predicted in April.
Although the trade slowdown was mostly caused by adverse macroeconomic shocks, there are strong indications that protectionism also played a part and is now taking new forms, which are harder to detect, said WTO Director-General Roberto Azevêdo in the release.
“Fortunately, there is something we can do about this. Negotiations underway in Geneva can address these problems, facilitating greater trade and opportunities to spur economic growth,” he said.
The WTO’s Doha Round of negotiation, in limbo for the past four years, may see some movement in the Ministerial Meeting scheduled in December in Indonesia, as members are trying to work out a limited pact on food security and trade facilitation.
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