US, EU pull down WTO growth forecast for 2011

MANILA, Philippines—The World Trade Organization has reduced its global trade growth forecast for the year to 5.8 percent in terms of volume, from its initial projection of 6.5 percent, in light of continuing uncertainty, particularly in the United States and Europe.

According to WTO economists, exports from developed economies were expected to rise by 3.7 percent and their real gross domestic product by 1.5 percent.

Shipments from developing economies, on the other hand, were seen growing at a faster pace of 8.5 percent, supported by real GDP growth of 5.9 percent.

Trade grew more slowly than expected these past months, the WTO economists noted, due mainly to the earthquake and tsunami that hit Japan last March, the prolonged budget impasse and credit downgrade in the US, and the sovereign debt crisis in Europe.

They related that “a high degree of uncertainty” was associated with their revised growth forecast for the year, considering that it implied a slowdown in global trade rather than a decline.

Traditionally, trade tends to tread the same path that economic output takes, the WTO economists explained.

“The situation in Greece is injecting considerable uncertainty into the economic environment. The economy may be at an inflection point where growth could pick up if policy makers devise a solution to the debt crisis that restores confidence in the financial system,” a statement posted on the WTO website stated.

WTO director general Pascal Lamy urged WTO member-economies to take advantage of the multilateral trading system to turn things around.—Abigail L. Ho