World trade growth in 2013 and 2014 is likely to be slower than previously forecast. WTO economists now predict 2013 growth of 2.5% (down from the 3.3% forecast in April) and 4.5% in 2014 (down from 5.0%), but they say conditions for improved trade are gradually falling into place. “There is a message for the WTO in this,” said WTO Director-General Roberto Azevêdo. “The past two years of sluggish trade growth reinforce the need to make progress in the multilateral negotiations.”
The demand for imports in developing economies is reviving but at a slower rate than expected. This hindered the growth of exports from both developed and developing countries in the first half of 2013 and was the reason for the lower forecasts, they said.
“There is a message for the WTO in this,” said WTO Director General Roberto Azevêdo. “The past two years of sluggish trade growth reinforce the need to make progress in the multilateral negotiations.
“Although the trade slowdown was mostly caused by adverse macro‑economic shocks, there are strong indications that protectionism has also played a part and is now taking new forms which are harder to detect,” he went on. “Fortunately, there is something we can do about this. Negotiations under way in Geneva can address these problems, facilitating greater trade and opportunities to spur economic growth.
“I am encouraged at the level of commitment shown by WTO members. But much hard work remains in the coming weeks if we are to deliver a successful outcome at the ministerial conference in Bali,” he said.
Some short-term prospects are improving with encouraging data coming from Europe, the US, Japan and China. Reports on private sector activities from purchasing managers (purchasing managers’ indices, which give some indication about future activity), shipping rates, automobile production and other leading indicators, suggest that the economic slowdown has bottomed out and that a tentative recovery is underway. This is expected to be reflected in rising quarterly growth in the months ahead, WTO economists say.
The European sovereign debt crisis has eased significantly since last year, unemployment in the United States has fallen to 7.3% from a post-crisis high of 10%, and growth of GDP (gross domestic product, a measure of a country’s output) in Japan has accelerated since the adoption of new fiscal and monetary policies.