WTO slashes 2013 global trade growth forecast
THE World Trade Organisation (WTO) yesterday slashed its forecast for trade growth this year, saying it feared protectionism was on the increase.
It cut its forecast for global trade growth to 3.3% from 4.5% and said trade grew only 2% last year. That was the smallest annual rise since records began in 1981 and the second-weakest figure on record after 2009, when trade shrank.
Trade in commercial services also grew only 2% to $4.3-trillion last year.
WTO director-general Pascal Lamy warned that this year could turn out even weaker than expected, especially because of risks from the euro crisis and because countries might try to restrict trade further in an attempt to shore up domestic growth. “The threat of protectionism may be greater now than at any time since the start of the crisis, since other policies to restore growth have been tried and found wanting,” he said.
Lamy, who will step down at the end of August this year, called the growth rate for last year “sobering”.
“It’s clear that conventional monetary and fiscal policies have failed to produce satisfactory results,” he said.
With conventional thinking set against loosening budgets and uncertainty about the benefits of “ever more unconventional” monetary policies, Mr Lamy said liberalising trade remained “a good bet at a modest cost”, though the political cost was sometimes high.
Asked if he counted Japan’s monetary easing as a protectionist policy, Mr Lamy said its use was fine as long as it was coordinated, and the countries belonging to the Group of 20 had agreed not to “go it alone” with easing to gain a comparative advantage for their own exports. “Whether or not they will walk the talk, we will see,” he said.
Despite the hope of growing trade this year and a provisional forecast of 5% growth next year, the annual rises are expected to stay below the historical trend of long-term growth, which was 6% for the 20 years pre-2008. Reuters