The World Trade Organization says it expects only minimal growth this year in international trade due to uncertainty posed by Severe Acute Respiratory Syndrome, or SARS and the aftermath of the war in Iraq.
The World Trade Organization predicts international trade will grow by three percent this year after weak 2.5 percent growth in 2002, and shrinkage the previous year. It says even the three percent figure is well below the nearly seven percent average annual growth rate of the 1990s. That period of rapid trade expansion has been credited with creating jobs and wealth around the world.
The organization's annual report on world trade, released Wednesday, says considerable uncertainty clouds trade prospects for this year. World Trade Organization chief economist Patrick Low says even the projection of three percent growth could plunge downward because of sluggishness in the world economy, slow investment and limited business confidence. He adds that the aftermath of war in Iraq and fears of SARS, especially in Asia, may further erode growth.
"The war may be over but very significant challenges remain," said Mr. Low. "And it is a little unclear still what the effect of all of this is going to be on oil prices, which are a key element of course in what happens to growth. And then we have SARS, the effect of SARS is still hard to judge because the whole issue is still unfurling. Clearly, in the first instance, SARS hits tourism, business travel, but the inevitable feed-through effects other sectors of the economy and into trade."
A senior economist with the World Trade Organization, Michael Finger, says the impact of SARS on economic powerhouse China and on other areas of the world will depend on how quickly the disease comes under control.
"The big question is how quickly this is done and how quickly the confidence is coming back," he pointed out.
Mr. Finger said a return to higher rates of world trade is important for everyone.
"This can then provide goods cheaper to consumers so that consumers have a larger choice of goods," he said. "All of this - the diversity of the products available to consumers, to be available at lower prices - these are all benefits of international trade."
Mr. Finger says a boost in world trade should help bring about increased global economic growth and welfare. He says that is why the World Trade Organization wants barriers to international trade, like tariffs, to be further reduced.