Singapore/Geneva: The World Trade Organisation (WTO) cut its forecast for commerce growth this year to 2.5 per cent as the euro-region debt crisis drags down the global economy and the US slows, WTO director general Pascal Lamy said.
The WTO, based in Geneva, scaled back the forecast five months after predicting that trade in manufactured goods would expand 3.7 per cent this year. International commerce grew a less-than-expected 5 per cent in 2011. The WTO also lowered its forecast for trade growth in 2013 to 4.5 per cent from 5.6 per cent.
“The main reason for growth slowing down is, of course, Europe,” Lamy said in Singapore on Friday. “We also know the US is lower than expected, Japan is not in great shape.”
Europe’s crisis, now in its third year, has scuppered the WTO’s hopes for an export-led recovery and threatens to kindle efforts by governments to protect their domestic industries by imposing trade-restrictive measures. Global commerce gained 0.3 per cent in the second quarter from the first or 1.2 per cent at an annualised rate.
The WTO calculates intra-European trade as international commerce, “so if Europe slows down more than the rest, intra-European trade, which is a big quantity, 30, 35 per cent of international trading volume, has a big impact on the numbers,” Lamy told reporters.
Signs also suggest growth is easing in emerging markets that have been driving global expansion. China, the world’s largest exporter of goods, said shipments abroad rose 7.1 per cent in the first eight months, putting the nation at risk of missing a goal for 10 per cent expansion of trade this year. Japan’s exports fell 5.8 per cent in August from a year earlier.
The WTO said on Friday that it sees global gross domestic product (GDP) rising 2.1 per cent this year and 2.4 per cent in 2013. Developing economies and those in the Commonwealth of Independent States, which comprises the former Soviet States except for the three Baltic Republics and Georgia, will pace that expansion, with 4.9 per cent growth this year and 5.2 per cent next year, according to the WTO.
The International Monetary Fund (IMF) predicted in July that the world economy would grow 3.5 per cent in 2012 and 3.9 per cent in 2013. The IMF will reduce its forecasts “by a few decimal points” on October 9, an assistant director in the fund’s Asia and Pacific Department said on Thursday.