Slowing global output growth has led the World Trade Organisation (WTO) to downgrade its 2012 forecast for world trade expansion to 2.5% from 3.7% earlier and to scale back its 2013 estimate to 4.5% from 5.6%.
In a recent report, WTO director-general Pascal Lamy noted that the global economy has encountered increasingly strong headwinds.
Output and employment data in the US have continued to disappoint, while purchasing managers? indices and industrial production figures in China point to slower growth in the world?s largest exporter.
?More importantly, the European sovereign debt crisis has not abated, making fiscal adjustment in the peripheral euro area economies more painful and stoking volatility. All of these factors have contributed to an easing of global trade growth, which slowed to a crawl in the second quarter.?
Warning of the bleak scenario, WTO said the volume of world trade managed to grow 0.3% in the second quarter compared to the first, or 1.2% at an annualized rate.
Economists have pointed that the slowdown in trade in the first half of 2012 which is primarily driven by an even stronger deceleration in imports of developed countries and by a corresponding weakness in the exports of developing economies, is also a cause of concern.
?WTO now expects world merchandise trade volume to grow by 2.5% in 2012 (down from 3.7% in April). On the export side, we anticipate a 1.5% increase in developed economies? trade (down from 2%) and a 3.5% expansion for developing countries (down from 5.6%). On the import side, we foresee nearly stagnant growth of 0.4% in developed economies (down sharply from 1.9%) and a more robust 5.4% increase in developing countries (down from 6.2%).?
Thus, encouraging the world to overcome such a scenario, the multilateral organisation has suggested that the world needs to renew commitment to revitalize the multilateral trading system which can restore economic certainty at a time when it is badly needed. ?The last thing the world economy needs right now is the threat of rising protectionism,? Lamy said.
However, the organization in its report has added that the WTO is expecting trade growth to rebound to 4.5% in 2013.
?Exports of developed and developing economies should increase by 3.3% and 5.7%, respectively, while imports of developed and developing countries should advance 3.4% and 6.1%,? said the report.
