Effects of recession to echo in 2012 says WTO
World trade will carry the scars of the financial crisis into 2012, the World Trade Organization said today, predicting 6.5% growth for this year, a rate much more modest than last.business Updated: Apr 07, 2011 19:09 IST
World trade will carry the scars of the financial crisis into 2012, the World Trade Organization said on Thursday, predicting 6.5% growth for this year, a rate much more modest than last.
The forecast -- for growth in trade of goods as measured by export volume -- is above the 6% average of the period 1990-2008, thanks in large part to strong developing economies.
But for worldwide commerce to recover and reach to where it was headed before the financial crisis, it would need to grow by an unlikely 19% this year, according to WTO statistics.
In 2009 global trade slumped 12%.
"The hangover from the financial crisis is still with us," said WTO Director General Pascal Lamy.
Developing country trade as measured by export growth is projected to grow by 9.5% in 2011, while that of developed countries is set to grow only 4.5%, the WTO said.
The organisation, whose forecasts are limited to merchandise and do not attempt to predict trends in traded services, also revised up its estimate of trade growth in 2010 to 14.5% from 13.5%. It said activity had recovered more strongly in developed countries than previously thought.
All its projections for this year are based on expected Gross Domestic Product (GDP) growth of 3.1% in 2011, at market exchange rates, reflecting a consensus of predictions. The WTO does not produce its own GDP forecasts.
The Japanese earthquake and nuclear accident have been factored into the prediction, but these twin disasters, together with volatile commodity prices and turmoil in the Middle East, make predictions particularly uncertain this year and the risk is to the downside, it said.
Lamy presented the figures as evidence of "how trade has helped the world escape recession in 2010" and warned of the dangers of setting trade barriers such as tariffs and subsidies.
"High unemployment in developed economies and sharp belt-tightening in Europe will keep fuelling protectionist pressures," he said.
The WTO added a best and worse case scenario to its 6.5% forecast, with the best at 10.5% and the worst at 2%.
The central 6.5% prediction contrasts with the 10% growth forecast by CPB Netherlands Bureau for Economic Policy and Analysis.