New Delhi: Faced with the slow recovery and fears of increasing protectionism, the WTO today scaled down the forecast for the global trade growth rate to 3.3 percent from 4.5 percent for this year, a development which does not augur well for India.
Slowing global trade according to experts will make it difficult for India to tide over the problems concerning widening current account deficit.
"World trade growth fell to 2 percent in 2012 - down from 5.2 percent in 2011 - and is expected to remain sluggish in 2013 at around 3.3 percent as the economic slowdown in Europe continues to suppress global import demand," a World Trade Organisation (WTO) statement posted on its website said.
WTO Director-General Pascal Lamy said the events of 2012 should serve as a reminder that the structural flaws in economies that were revealed by the crisis have not been fully addressed, despite important progress in some areas.
"Repairing these fissures needs to be the priority for 2013," Lamy added. It said that improved economic prospects for the US in 2013 should only partly offset the continued weakness in the EU, whose economy is expected to remain flat or even contract slightly this year according to consensus estimates.
China's growth should continue to outpace other leading economies, cushioning the slowdown, but exports will still be constrained by weak demand in Europe. As a result, 2013 looks to be a near repeat of 2012, with both trade and output expanding slowly, it said.
"As long as global economic weakness persists, protectionist pressure will build and could eventually become overwhelming. The threat of protectionism may be greater now than at any time since the start of the crisis, since other polices to restore growth have been tried and found wanting," Lamy said.
In September 2012, the WTO had forecast that the world trade would expand by 4.5 percent in 2013. Further, it said that developing countries and the Commonwealth of Independent States collectively raised their output by 4.7 percent in 2012. India recorded a 5.2 percent increase.
"Contributing to the slow growth in Asia were India and Japan, where exports declined by 0.5 percent and 1 percent, respectively," it added.
During the April-February period, India's exports declined by 4 percent to $265.95 billion. Imports duringthe period grew by a mere 0.25 percent to $448 billion, leaving a trade deficit of $182.1 billion.
Current Account Deficit (CAD), which is the difference between inflow and outflow of foreign currency, has touched a historic high of 6.7 percent of the GDP in quarter ending December.
On prospects for 2013 and 2014, the WTO said the outlook for world trade and output looks unsettled, as positive economic trends have also been accompanied by more worrisome developments.
It said that the current forecast could be derailed if certain downside risks materialise. "These include revived financial market turbulence related to the euro crisis, commodity price spikes, geopolitical tensions, and rising protectionism," it added.
Updated Date: Dec 20, 2014 17:50 PM