The World Trade Organisation said that world trade is expected to grow at 5.8% in 2011 as compared to a smart expansion of 14.1% in 2011, as the global economy has been gripped by US credit downgrade and turmoil in the financial markets.

Earlier, the WTO had estimated the global commerce to grow by 6.5% in volume terms.

The WTO latest report said that "Downside risks to GDP have certainly intensified in the last few months, and where output goes trade tends to follow. The situation in Greece is injecting considerable uncertainty into the economic environment. The economy may be at an inflection point where growth could pick up if policy makers devise a solution to the debt crisis that restores confidence in the financial system."

The damage to the developed world is likely to be much more pronounced than to the developing countries. Developed economies' exports are expected to rise by 3.7% and their output to go up by 1.5%. Shipments from developing economies are estimated to increase by 8.5% and GDP by 5.9%.

Mr Pascal Lamy director general of WTO said that "The member countries must remain vigilant."

The WTO report said that however, there still remains some upside potential. Disappointing output and employment data have damaged business and consumer confidence and contributed to the recent turmoil in financial markets.

(Sourced from PTI)