Geneva, Switzerland (4E) – The World Trade Organization (WTO) lowered its outlook for global trade this year by cutting its forecast for commerce growth to 2.5 per cent, citing concerns in the euro zone debt crisis and the slowdown in the U.S. economy.
The Geneva-based WTO said that trade next year will improve to 4.5 per cent, but still lower compared to the its previous projection of 5.6 per cent gain. WTO Director-General Pascal Lamy said that the forecast in 2013 assumed that European leaders can agree on policy measures that will keep the euro intact and that U.S. lawmakers can come up with a compromise deal that will lead to stability in federal finances and fend off the “fiscal cliff”.
International trade grew 0.3 per cent in the three months through June compared to the first quarter or 1.2 per cent from the second quarter of last year, according to the WTO report.
Europe’s debt crisis, which has now stretched to its third year, has dashed hopes by the WTO for a recovery driven by exports and has fueled protectionist stance among states as they protect their domestic economies through measures that restrict trade.
The WTO reduced its growth target for exports from developed countries to 1.5 per cent, which is lower than the previous estimate of 2 per cent growth. The forecast for export performance is even lower among developing countries as the WTO lowered its original projection of 5.6 per cent growth down to 3.5 per cent.
The WTO report was announced following complaints expressed by the finance minister of Brazil on recent quantitative easing action taken by the U.S. and Japan, saying that results to devaluation of their currencies that may lead to a global currency war.
Category: Macro Economics
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