WTO sees trade growth slowing in 2007
Trade growth reached 8.0 per cent in 2006, accelerating by two percentage points over 2005.
By PTI |
Geneva: The growth in global trade could ease off this year under the impact of a forecast slowdown in the world economy caused by uncertainty among investors, the World Trade Organisation said on Thursday.
"The reduced pace of global economic activity will imply lower trade growth which is expected to average maybe around 6 percent in 2007," the WTO's chief economist Patrick Low told journalists.
Trade growth reached 8.0 per cent in 2006, accelerating by two percentage points over 2005. the WTO said in a preliminary report on trade prospects.
The growth in overall demand in the United States is expected to remain weak in the first half of the year, while Japan and Europe are not expected to post as impressive economic performances as in 2006, Low added.
WTO Director General Pascal Lamy said the uncertainties and risks should act as a spur for all players in the global economy to work for a successful conclusion of the deadlocked Doha round of trade liberalisation talks.
"A successful conclusion to the Doha Round holds great potential for boosting growth and alleviating poverty," Lamy said.
However, WTO economists would not be drawn on specific figures or forecasts of how a successful conclusion to the round, which is aimed at breaking down trade barriers, would stimulate the world economy.
"It seems to me that at the end of the day anyone who tells you, you do this in the Doha Round and this is what is going to happen in the economy, is a bit of a charlatan," said Low.
Nonetheless, "the more certainty there is about the business environment, the greater the opportunities are as a consequence of the opening up of markets, the more promising it would be for economic prosperity," he said.
His points were echoed by WTO senior economist Michael Finger, who noted that it would take several years for the impact of a successful trade agreement to be felt across the global economy.
The WTO report said greater risks of a downturn in financial and property markets and large current account imbalances were fuelling investor uncertainty.
"The consensus among forecasters favours a moderate deceleration in world economic growth in 2007," it added.
However, economic fundamentals in the major economies are strong enough to keep global growth in Gross Domestic Product (GDP) close to 3.0 per cent, compared to 3.7 percent last year, the report underlined.
The United States is likely to bear the brunt of the slowdown of GDP growth, while any European let-up was likely to be less pronounced.
Japan could avoid a slowdown in growth altogether, the report said.
In such a scenario, developed economies could maintain their average GDP growth at 2.5 percent in 2007.
The modest slowdown is likely to have an impact in the developing world, although economies there remain set to grow at twice the rate of their developed counterparts, the WTO said.
China, which is classified as a developing country, saw its merchandise exports exceed those of the United States in the second half of 2006, and this trend is likely to continue in 2007.
"If China's growth continues... it will continue to exceed US merchandise exports," said Finger.
The economists also said that environmental concerns are likely to play a more prominent role in policy, for example consumer and political concerns about the environmental costs of transporting goods across countries.
"The potential for this to affect world trade is real, but the issue we need to do work on... is really to look at what the relationships are," said Low.
However, current analysis is very insufficient, and other factors such as energy use should be taken into consideration alongside transport, he added.
"The reduced pace of global economic activity will imply lower trade growth which is expected to average maybe around 6 percent in 2007," the WTO's chief economist Patrick Low told journalists.
Trade growth reached 8.0 per cent in 2006, accelerating by two percentage points over 2005. the WTO said in a preliminary report on trade prospects.
The growth in overall demand in the United States is expected to remain weak in the first half of the year, while Japan and Europe are not expected to post as impressive economic performances as in 2006, Low added.
WTO Director General Pascal Lamy said the uncertainties and risks should act as a spur for all players in the global economy to work for a successful conclusion of the deadlocked Doha round of trade liberalisation talks.
"A successful conclusion to the Doha Round holds great potential for boosting growth and alleviating poverty," Lamy said.
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However, WTO economists would not be drawn on specific figures or forecasts of how a successful conclusion to the round, which is aimed at breaking down trade barriers, would stimulate the world economy.
"It seems to me that at the end of the day anyone who tells you, you do this in the Doha Round and this is what is going to happen in the economy, is a bit of a charlatan," said Low.
Nonetheless, "the more certainty there is about the business environment, the greater the opportunities are as a consequence of the opening up of markets, the more promising it would be for economic prosperity," he said.
His points were echoed by WTO senior economist Michael Finger, who noted that it would take several years for the impact of a successful trade agreement to be felt across the global economy.
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The WTO report said greater risks of a downturn in financial and property markets and large current account imbalances were fuelling investor uncertainty.
"The consensus among forecasters favours a moderate deceleration in world economic growth in 2007," it added.
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However, economic fundamentals in the major economies are strong enough to keep global growth in Gross Domestic Product (GDP) close to 3.0 per cent, compared to 3.7 percent last year, the report underlined.
The United States is likely to bear the brunt of the slowdown of GDP growth, while any European let-up was likely to be less pronounced.
Japan could avoid a slowdown in growth altogether, the report said.
In such a scenario, developed economies could maintain their average GDP growth at 2.5 percent in 2007.
The modest slowdown is likely to have an impact in the developing world, although economies there remain set to grow at twice the rate of their developed counterparts, the WTO said.
China, which is classified as a developing country, saw its merchandise exports exceed those of the United States in the second half of 2006, and this trend is likely to continue in 2007.
"If China's growth continues... it will continue to exceed US merchandise exports," said Finger.
The economists also said that environmental concerns are likely to play a more prominent role in policy, for example consumer and political concerns about the environmental costs of transporting goods across countries.
"The potential for this to affect world trade is real, but the issue we need to do work on... is really to look at what the relationships are," said Low.
However, current analysis is very insufficient, and other factors such as energy use should be taken into consideration alongside transport, he added.
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