Apr 18, 2008

World Trade Growth Rate Slowing

The WTO has reported that world trade growth slowed in 2007. It is also predicting an even slower growth in 2008.

THE World Trade Organisation says protectionism might increase as world trade growth slows in the wake of economic uncertainties.
World trade growth could drop to 4.5 per cent in 2008 -- 1 per cent lower than growth in 2007, said the WTO in its latest World Trade 2007, Prospects for 2008, released overnight in Geneva.
"The prediction is based on a number of downside factors," said WTO chief economist Patrick Low. "It's based on today's information, but there are downside factors which may well influence this estimation in the months to come." Mr Low said some effects of the financial crisis had not filtered into the real economy in many parts of the world.
He referred to inflation, business uncertainty and the continued rises in commodity prices.
The pace of growth in global trade had already contracted by 3 per cent to 5.5 per cent in 2007 from 8.5 per cent in 2006, he said.
The rate of contraction was faster than the WTO had forecast in April last year when it predicted growth of 6 per cent for 2007.
The rapid slowdown, it said, reflected the sharp economic deceleration in key developed countries amid global financial market turbulence.

WTO boss Pascal Lamy is concerned that this slowdown could result in a rise in protectionist trends.

"These are uncertain and troubling times for the global economy," said WTO director-general Pascal Lamy.
Mr Lamy said that, so far, the combination of financial market turmoil, significant price surges and the slowdown of developed economies had not yet led to a disruption of trade.
"But protectionist pressures are building as policymakers seek answers to the problems that confront us," he said.
"We must reinforce our global trading system with rules that are more transparent, predictable and equitable."
He said a reinforced trading system was an essential anchor for economic stability and development.
"The best way to achieve this is to conclude the Doha Development Round. The time for posturing and delay has ended."