The World Trade Organisation (WTO) on Wednesday cut its forecast for global trade growth in 2013 to 3.3 percent, from the previous prediction of 4.5 percent.
Illustrative image. (Photo: Internet)
The predicted growth is higher than the rate of 2 percent in 2012 but is below the 20-year average of 5.3 percent and well below the pre-crisis trend of 6 percent (1990-2008), the WTO said in a report, given the economic slowdown in Europe which continues to suppress global import demand.
Exports of developed economies would increase by 1.4 percent in 2013, and developing countries would see a 5.3-percent growth, according to the report, while on the import side, developed economies are estimated to see a 1.4-percent growth and developing economies 5.9 percent.
The 2013 global trade forecast was based on an assumed 2.1-percent growth in world gross domestic production (GDP) at market exchange rates, basically unchanged from 2012, with developed economies growing 1.1 percent and the rest of the world growing 5 percent, said the trade organization.
Economists figured out that significant downside risks remain centered on the euro crisis and the pace of fiscal contraction in developed countries.
The report predicted that China should continue to grow faster than the rest of the world in 2013, albeit at a slower pace than in the recent past, which should provide support for imports from other countries.
World trade growth fell to 2 percent in 2012, down from 5.2 percent in 2011, the report said. Economists said the abrupt deceleration was caused by slow growth in developed economies and recurring bouts of uncertainty over the future of euro.
“The event 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. Repairing these fissures needs to be the priority for 2013,” said WTO Director General Pascal Lamy.
Due to falling prices for traded goods, especially commodities such as iron core and coal, the value of world merchandise exports in 2012 increased only 0.2 percent to 18.3 trillion U.S. dollars, nearly the same with 2011. The world commercial services exports in 2012 were at 4.3 trillion U.S. dollars, only 2 percent higher than in 2011, according to the report.
The report stated that in 2012, exports of developed countries grew by 1 percent and exports of developing countries grew by 3.3 percent; imports of developed countries dropped 0.1 percent last year, while those of developing economies grew by 4.6 percent.
Among those countries, China saw a 6.2-percent growth in its exports and 3.6-percent increase in its imports in 2012, according to the report.
Statistics showed that the 2.1-percent world GDP growth at market exchange rates in 2012, compared with 2.4 percent in 2011, was below the 3.2-percent average over the last 20 years preceding the financial crisis and also below the 2.8-percent average of the last two decades including the crisis period.
In 2012, the output of developed economies as a whole rose by 1.2 percent, and developing countries and Commonwealth of Independent States (CIS) collectively by 4.7 percent.
“As long as global economic weakness persists, protectionist pressure will build and could eventually become overwhelming,” said Lamy.
“To prevent a self-destructive lapse into economic nationalism, countries need to refocus their attention on reinforcing the multilateral trading system. Trade can once again be an engine of growth and a source of strength for the global economy rather than a barometer of instability,” said Lamy.
The report also forecasted the world trade volume growth in 2014 is expected to improve to 5 percent, based on strong assumptions about the medium-term trajectory of GDP, with exports of developed and developing countries should increase respectively by 2.6 percent and 7.5 percent, and imports increase by 3.2 percent and 7.4 percent.
The report also assumed 2014 world output growth to be 2.7 percent, with developed countries advancing 1.9 percent and the rest of the world growing 5.1 percent.