World Trade Organisation trims trade growth nos. for 2013

NEW DELHI: The World Trade Organisation on Thursday forecast a pickup in world exports in the second half of the year even as it trimmed the outlook for the entire 2013 because of weak first half.

The multilateral organisation said growth could be as high as 3.8% in the second half of the year, which should benefit countries like India that are looking for exports pick up to solve their record high CAD problem.

The WTP trimmed its global trade growth forecast for 2013 to 2.5% from 3.3% estimated earlier. However, given that the volume of world merchandise trade was only up 1.2% in the first half of 2013 compared to the same period in 2012, the muted forecast suggests 3.8% year-on-year increase in the second half of 2013.

In its report released on Thursday the WTO said such a growth “is feasible”.

India’s exports grew in double digits for two consecutive months at 11.6% in July and 13% in August, led by sectors such as textiles, handicrafts and pharma. Engineering exports turned positive after a number of months in August, expanding by over 2%. This helped bring down the trade deficit to around $12 billion a month from around $20 a month earlier.

Short-term prospects are improving with encouraging data coming from Europe, the US, Japan and China, the WTO economists pointed out.

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, the WTO said.

Exports of developing Asia (which includes China) dipped 1.4% in the second quarter of 2013 compared to the first quarter (5.4% annualized).

“This was due to a relatively sharp drop in China’s exports, which could partly be related to weak demand in China’s trading partners, but could also reflect recent Chinese efforts to correct for misreporting of trade values”, the report said..

The WTO also warned that rising protectionism was also hurting trade.

“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,” said WTO Director-General Roberto Azevêdo. It said the the slow growth should focus the world’s attention on getting stalled trade talks moving.

“There is a message for the WTO in this,” said Azevêdo. “The past two years of sluggish trade growth reinforce the need to make progress in the multilateral negotiations.” Negotiations under way in Geneva can address these problems, facilitating greater trade and opportunities to spur economic growth, the new WTO DG noted.