Weak is the word from the World Trade Organisation which has slashed its 2013 forecast for trade growth.
Having previously thought it would rise by 4.5 percent, it is now saying we should expect only 3.3 percent growth, rising to 5.0 percent in 2014.
For 2012 the WTO said global trade increased by just two percent – the smallest annual rise since records began in 1981. The only time it was worse was 2009 when trade shrank.
WTO Director-General Pascal Lamy told reporters: “The final trade numbers for 2012 are, let’s say, quite sobering. Developed economies, which as you know, are now half of world GNP, recorded a meagre one percent increase in their exports last year.”
The WTO head did not seem too confident in the 2013 prediction saying this year could turn out even weaker, especially because of risks from the euro crisis.
He also warned that countries about protectionism as countries might try to restrict trade further in a desperate attempt to shore up domestic growth.
“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,” Lamy said.
Asked if he counted Japan’s monetary easing as a protectionist policy, Lamy said its use was fine as long as it was coordinated, and the countries belonging to the G20 group had agreed not to “go it alone” with easing to gain an comparative advantage for their own exports.
Despite the hope of quickening trade this year and a provisional forecast of 5.0 percent growth in 2014, the annual rises are expected to stay below the historical trend of long-term growth, which was 6.0 percent for the 20 years leading up to the financial crisis but now stands at 5.3 percent.