Global trade growth, already weaker than predicted in 2011, will further slow this year as the EU fights recession and even China’s dynamic growth loses pace, the World Trade Organisation said Thursday.
Economic shocks like the eurozone debt crisis are behind an expected slowdown in growth to 3.7 percent, from 5.0 percent in 2011, the trade body said.
“Multiple setbacks” last year dampened trade growth more than forecast, according to economists who predicted growth of 5.8 percent for 2011 in September.
In addition to the eurozone crisis, the WTO cited the effects of the Japanese earthquake and tsumani and severe flooding in Thailand.
A year ago, the Geneva-based body had predicted 6.5 percent growth for 2011 after a rebound of 13.8 percent in 2010 following the financial crisis.
The WTO expects trade to recover somewhat by 2013 and result in additional growth of 5.6 percent.
“More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile,” WTO chief Pascal Lamy warned.
“The further slowing of trade expected in 2012 shows that the downside risks remain high. We are not yet out of the woods,” he said.
The latest WTO forecast assumes growth in global production this year of 2.1 percent (down from 2.4 percent in 2011) but there are some risk factors, such as a steeper than expected downturn in Europe and rapidly rising oil prices, that could impact on trade even further, it said.
“Recent production data suggests that the European Union may already be in recession, and even China’s dynamic economy appears to be growing more slowly in 2012,” said the WTO.
In 2011 developed countries actually exceeded export expectations with growth of 4.7 percent, driven by a 7.2 percent rise in exports from the United States.
But the 5.4 percent growth rate recorded among developing countries was lower than anticipated as they were hit by an interruption in oil supplies during the Libyan conflict and the Japanese earthquake disrupted supply chains.
“The flooding in Thailand threw even more sand in the gears of global supply chains,” Lamy told a news conference at the WTO headquarters.
“But many of the shocks that hit developing countries last year were one-off events. Growth in these countries should normally bounce back.”
Asia was the region that recorded the strongest growth in exports (6.6 percent), thanks to a leap of 16.1 percent in India and 9.3 percent in China, though this was considerably down on the 2010 Beijing figure of 28.4 percent.
In 2011 the dollar value of world merchandise trade increased 19 percent to $18.2 trillion, surpassing a 2008 peak of $16.1 trillion but owing mainly to higher commodity prices.-By Lucy Christie