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Last Updated:[16-09-2013 01:25:54 EDT] Zoom in Zoom out Back to Tradenews

UN Report Paints a Grim picture about Global Trade

tradenews A top economic report, released by the United Nations Conference on Trade and Development (UNCTAD) on Thursday, 12-9-2013 hints at a slow and struggling global trade scenario that is likely to extend for many more years to come. If the current economic uncertainties that emerged from the 2007-08 financial crisis aren’t painful enough for world economies, this extensive period of struggle could force many emerging nations, currently dependent on exports to support their flourishing economies, to find new sources of investment. By the looks of it, this transformation will have to come sooner than later.

Economists at UNCTAD have utilised this annual report to question the prudence of sticking onto the export oriented growth model, currently the toast of many developing countries across the world including China. UNCTAD maintains that in the shadow of this model, the rapid economic growth rates as seen in 2008 and before cannot be achieved, and that any kind of change in scene will take a further many years. Infact, the World Trade Organization (WTO) is all set to downgrade its global growth forecast for 2013, from an ambitious 3.3% to a face saving 2.5%.

Most of the emerging economies like India, China and Brazil are facing slowing growth and are struggling to change their current export based growth models to a domestic source of expansion. Growth rates in these countries have progressively depreciated, recording a low of 3.5% in April 2013. Even the developed countries have suffered, except for the US which recorded a positive growth rate in its international trade.

UNCTAD suggests measures to rectify this situation and move towards greater trade stability. Global economies must encourage greater domestic consumption in sectors that are likely to raise foreign direct investment levels alongside the countries’ existent export sectors. There must also be more responsible financing with regards to productive domestic sectors like industry, agriculture, services and infrastructure. This financing must come majorly from Central and Development banks of the respective economies. Paying due respect to investment while diverting less credit towards consumption will help alleviate this problem in the longer run.

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