Global growth to slow, says WTO
A report by the World Trade Organisation (WTO) has warned that the world faces a long-term trend of lower growth.
Although global goods trade is predicted to grow slightly more than usual next year, the organisation’s director director general Pascal Lamy has warned that the world badly needs the successful resolution of the Doha world trade round in order to bolster flagging growth.
WTO economists have predicted growth of 7 per cent next year, slightly up on this year’s expected growth of 6.5 per cent.
Lamy said in the report that a long term trend for lower growth rates is a cause for worry.
He said: “While growth in trade will remain satisfactory in 2005 the decelerating trend is cause for some concern.
To set us on the right course, we need to create more opportunities for trade, particularly in developing countries, and we need to adjust global trade rules to better meet the needs of entrepreneurs in the 21st century.”
The report said that the recent sharp rise in oil prices would hit global trade.
Meanwhile, an Organisation for Economic Co-operation and Development (OECD) report into the American economy reported yesterday that expansion should not be thrown off track by Hurricanes Katrina and Rita.
The OECD said the near-term outlook was favourable and added that “the fundamental factors that have supported activity so far could carry forward to 2006.”
The organisation, which is a forum for the world’s richest nations, said that American GDP would grow by something like 3.5 per cent next year.
The risks to a soft landing are inflation, which could push up interest rates even higher, as well as a dramatic slowdown in the American housing market.
The OECD has predicted that the Federal Reserve will increase interest rates to 4.5 per cent over the coming months and then reassess its tough, anti-inflationary policy.
The organisation also added that America could be at risk from a sharp drop in the value of the dollar.