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International trading environment looking down

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The outlook for the global economy has worsened in recent months as risks and uncertainties increase despite seemingly encouraging signs at the end of 2010. The WTO Annual Report by the Trade Policy Review Body shows global activity is down and economic performance is uneven between countries as debt levels, financial volatility and high unemployment persist, deteriorating confidence. These risks, along with falling confidence have been magnified by the perception that government’s responses to economic challenges have so far been inadequate. World trade growth has been slower than expected in recent months. A range of problems have hit developed economies including natural disasters, national budget issues, credit conditions and the sovereign debt crisis. Developing countries have also been hit hard by global circumstances with signs of overheating in some of the more major markets. In light of the deteriorating conditions the forecast for world export growth in 2011 was 5.8 percent, revised from an earlier estimate of 6.5 percent. Developed economies exports however are expected to rise by 3.7 percent, with those from developing countries expected to rise by 8.5 percent. The economic recovery has not been strong enough to boost employment growth with employment not expected to return to its 2008 levels in high income economies until 2015. TPRB reviews show an increase in the imposition of new trade restrictions this year, with 53 percent more restrictive measures recorded than in the previous period, although governments have largely continued to resist protectionist pressures. Actions to shield domestic industries are adding to the downside risks for the global economy. Some sectors most affected by new restrictive trade measures are base metal and products, machinery and mechanical appliances, organic chemicals and meat products. New restrictive measures introduced between mid-October 2010 and 2011 however, cover around 0.9 percent of world imports, down from 1.2 percent recorded in the previous period. Some countries have adopted measures  to facilitate trade by reducing or temporarily exempting import tariffs and streamlining customs procedures. Regional Trade Agreements continue to be strong with 390 RTAs notified to the WTO as of the end of October 2011, with 211 of those in force.

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