By: Masahudu Ankiilu Kunateh
The World Trade Organisation (WTO) has slashed its trade growth forecast for 2013, citing risks from the eurozone crisis, and from greater protectionism.
Global trade is now expected to grow by 3.3% this year. This is down from the WTO’s earlier forecast of 4.5%.
However, next year, growth should rebound to about 5%, said WTO Director General Pascal Lamy.
Countries might turn to protectionism, as other attempts to boost growth have been “found wanting,” he said.
“There is a need for more rules-based trade in order to reduce unemployment and to stimulate growth,” he said.
The WTO also warned that the weakness in Europe’s economies would continue to weigh on trade.
It said that “improved economic prospects for the United States in 2013 should only partly offset the continued weakness in the European Union, whose economy is expected to remain flat or even contract slightly this year according to consensus estimates”.
“China’s growth should continue to outpace other leading economies, cushioning the slowdown, but exports will still be constrained by weak demand in Europe,” it added.
The WTO said that trade had grown by just 2% in 2012, the second-worst figure since records began in 1981. The worst performance had come in 2009 when trade shrank.
Average growth over the past two decades has been 5.3%, it said.
In dollar terms, the value of the goods traded last year remained stagnant at $18.3 trillion (£11.9 trillion). The value was unchanged because prices for coffee, cotton, coal and iron ore fell.
“The events of 2012 should serve as a reminder that the structural flaws in economies that were revealed by the economic crisis have not been fully addressed, despite important progress in some areas,” Mr Lamy said.
“Repairing these fissures needs to be the priority for 2013.”