The Hindu Business Line : Global trade forecast to expand by 4.5% this year, says WTO

“A reinforced trading system is an essential anchor for economic stability and development and the best way to achieve this is to conclude the Doha Development Round.”

Our Bureau

New Delhi, April 21

The World Trade Organisation (WTO) forecast a moderate global trade expansion of about 4.5 per cent in real terms this year, following world trade growth sliding to 5.5 per cent in 2007 from 8.5 per cent in 2006.

In its preliminary assessment released in Geneva today, the world trade monitoring body contends that this downbeat prognosis stems from the fact that the sharp economic deceleration in key developed countries is only partly counterbalanced by continuing strong growth in emerging economies.

Stating that recent developments cloud the near-term prospects for the world economy, WTO said among these include expectations of recessionary tendencies in the US, weaker demand growth in both Europe and Japan, a rise in inflation and depressed global stock.

The WTO Director General, Mr Pascal Lamy said, “these are uncertain and troubling times for the global economy”. Hence, he said, “a reinforced trading system is an essential anchor for economic stability and development and the best way to achieve this is to conclude the Doha Development Round. The time for posturing and delay has ended. What we need now is action.”

Performance slows down

On global trade performance in 2007, it said the preliminary figure of 5.5 per cent trade growth for 2007 is slightly lower than the 6 per cent forecast.

The global economy and world trade began to slow down in 2007 due to the deceleration of demand in the developed regions.

But developing economies and the Commonwealth of Independent States (CIS) region bucked this trend and maintained or strengthened their expansion of output, contributing more than 40 per cent of the world output growth in 2007.

Pointing out that weaker demand in the developed countries provided a less favourable framework for the expansion of global trade in 2007 than in preceding years, it said lower import growth was observed in North America, Europe, Japan and the net oil importing developing countries in Asia.

It is estimated that the developing countries as a group accounted for more than one half of the increase in world merchandise imports in 2007.

WTO said the developing countries fared well in the expansion of trade in 2007.

Their combined merchandise exports rose by 16 per cent to $5 trillion and imports rose by 18 per cent, resulting in an aggregate surplus in excess of $450 billion.

The share of developing countries in world merchandise trade reached 34 per cent, an all-time record.

Services exports

World merchandise exports in dollar terms rose by 15 per cent to $13.6 trillion in 2007 with almost two-third of this change in the dollar value being attributed to inflation.

Commercial services exports rose by 18 per cent to $3.3 trillion.

The increase in commercial services exports in 2007 was markedly faster than in the preceding year and somewhat faster than that of merchandise trade, which expanded slightly less than in 2006.

The WTO said the acceleration in services exports could be seen in all major regions and in all three services categories such as transport, travel and other commercial service.

China frontrunner

Since 2001, when China joined the WTO, its exports and imports have expanded on average by 25 per cent annually, more than twice as much as world trade.

Since 2004, China’s merchandise trade (exports and imports) overtook that of Japan and in 2007, its merchandise exports outstripped those of the US.

However, China remained the second largest merchandise exporter in 2007, after the European Union (EU), WTO said.

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