WTO scales back trade forecast to 5.8 percent
In light of a deteriorating global economy, World Trade Organization economists are revising their 2011 trade forecast to 5.8 percent, down from an earlier conservative estimate of 6.5 percent.
In a statement, the WTO said trade had grown more slowly than expected in recent months and the international outlook was increasingly uncertain.
It is now projecting world merchandise exports to increase by 5.8 percent in volume terms, supported by real GDP growth of 2.5 percent.
Developed economies' exports are expected to rise by 3.7 percent and their output to grow 1.5 percent. Shipments from developing economies are estimated to increase by 8.5 percent and GDP by 5.9 percent.
Director-General Pascal Lamy said during the economic crisis of 2008-09, WTO members were for the most part able to resist protectionist pressures. However, weaker economic growth, high unemployment and forced austerity was testing them and another downturn could prove a breaking point.
“The multilateral trading system has been instrumental in maintaining trade openness during the crisis, thereby avoiding even worse outcomes," he said.
However, he warned members to remain vigilant.
"This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future.”
Since the original forecast for 2011 was issued on April 22, he said developed economies in particular had been affected by the lingering effects of the earthquake and tsunami in Japan, the prolonged US budget impasse and credit downgrade, and the ongoing euro area sovereign debt crisis.
The April projection was quite cautious about the prospects for trade, and as a result, the size of the revision is relatively small, according to the WTO.
The WTO said there was an unusually high degree of uncertainty associated with the forecast, which implied a slowdown in world trade rather than an outright decline.
While the trade impact of the Japanese disaster turned out to be smaller than expected, the drag imposed by turbulent financial markets could end up being larger than anticipated.