Steve Chiotakis: As if the global economy needed anything else to worry about, today the World Trade Organization revised down its growth forecast for worldwide trade this year, calling the global economic outlook “increasingly uncertain.”
Reporter Christopher Werth is with us now from London with the latest on why trade could
be an ominous early indicator. Hi Chris.
Christopher Werth: Hey.
Chiotakis: So why is world trade dropping like this?
Werth: Well, The World Trade Organization is more or less pointing the finger at — and no big surprise here — the European debt crisis, and the problems in Greece. So most of the slow down is in Europe and it’s biggest trading partner, the U.S. But this has a domino effect. With fewer Americans and Europeans buying fewer tablet computers, for example, countries like China sell fewer of them.
Chiotakis: So is this bad news? Does this mean we’re heading into another global recession?
Werth: Steve, trade is one of the most important barometers of global economic health. I mean, think about the cargo hold under your feet when you fly in an airplane. That’s not just for your suitcase. Airlines use that space to ferry goods all over the world. Before these recent concerns, projections had been there would be plenty of demand. This week, IATA — the International Air Transport Association — says those cargo hold are flying around half empty.
So, to answer your question about another global recession, I spoke with Brian Pearce. He’s an economist at IATA.
Brian Pearce: Trade is a good indicator because when at the end of 2008 world economies started to get into real trouble, we saw world trade shrink by a quarter, a dramatic collapse. Now that hasn’t happened yet.
So not yet, Steve — not the most reassuring of messages this morning.
Chiotakis: All right, Christopher Werth reporting from London for us. Chris, thank you.
Werth: Hey, thanks Steve.