The World Trade Organization (WTO) slashed its forecast for trade growth in 2013 on Wednesday, saying it feared protectionism was on the increase.
The WTO cut its forecast for global trade growth in 2013 to 3.3 per cent from 4.5 per cent and said trade grew only 2.0 per cent in 2012, which was the smallest annual rise since records began in 1981 and the second weakest figure on record after 2009 when trade shrank.
WTO director general Pascal Lamy warned that 2013 could turn out even weaker than expected, especially because of risks from the euro crisis, and countries might try to restrict trade further in a desperate attempt to shore up domestic growth.
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"The threat of protectionism may be greater now than at any time since the start of the crisis, since other policies to restore growth have been tried and found wanting," he said.
Mr Lamy, who will step down at the end of August this year, called the 2012 growth rate "sobering".
Despite the hope of quickening trade this year and a provisional forecast of 5.0 per cent growth in 2014, the annual rises are expected to stay below the historical trend of long-term growth, which was 6.0 per cent for the 20 years leading up to the financial crisis but now stands at 5.3 per cent.
"Traditionally we've reckoned on a 2:1 ratio of trade growth to GDP (gross domestic product) growth. This year it was 1:1 and we would expect to see that relationship re-establish itself," said WTO chief economist Patrick Low.
The forecasts are based on global GDP growth of 2.1 per cent in 2013, a consensus estimate that the WTO said was unchanged from 2012.
"Risks to the forecast are firmly rooted on the downside and are mostly linked to the sovereign debt crisis in Europe," the WTO said in a statement.
Copyright @ Thomson Reuters 2013
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