• JULY 14, 2009

WTO on the global economy: Recovery is far from over

WTO's take on the global economy
Various individual experts and organizations have been giving their take on the global economy and how deep the recession is. Many are of the opinion that the global economy is far from a significant recovery and the latest to join this bandwagon is the World Trade Organisation (WTO). The WTO believes that while a recovery yet is still far off, not many countries have done away with their respective protectionist barriers. Falling corporate profits and rising unemployment have led to some countries imposing trade barriers to protect their countries, little realising that this could have an impact on global trade going forward.

In fact, this brings to fore the adage, "What goes around comes around," which is all the more relevant in today's world where globalization has significantly enhanced. Thus, increasing protectionism would only serve as a short term measure and may not be healthy in the long term interests of a nation, something which a developed nation like the US also realized. As reported in a leading business daily, the director general of the WTO Pascal Lamy has remarked that import penalties and other border restrictions are closing off markets and causing more difficulty in a time of depressed demand.

On the global economy, this is what Lamy has to say, "I would caution against excessive optimism. Although financial markets are showing signs of stabilizing, the crisis is far from over, in particular in many developing countries that are only now starting to feel its full force on their trade and economic growth." We couldn't agree with him more!

India's rising status in the global arena
India is making considerable strides in leaving its mark on international policymaking. The recent G8 summit (or should we say G14) in Italy is a case in point where the country made its stand clear on global trade and climate change. While on the climate change issue India refused to give in to the demand of the West with respect to meeting carbon emission targets, as far as global trade is concerned, the country along with the rich nations agreed to conclude the Doha round by 2010 in a bid to end disputes with respect to tariffs and subsidies.

And what has led to the resurgence of India in international policymaking? Ironically, it is the global recession. The country may have logged in a stupendous growth of 9% plus in the two years prior to FY09, but it is during the recession last year that India's strength came to the fore. After all, even though the country's growth slowed down to 6.5%, it was still far superior to the developed world which has been mired in a recession. What is more, the US President Obama is also of the opinion that the big emerging countries should have a greater say in international policymaking. Thus, while India does have its share of serious problems especially on the infrastructural front, it certainly needs to be lauded in making itself heard in the global forum.

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