WTO Predicts Second Straight Year of Slowing World Trade Growth
World trade will grow 3.7% in 2012, but that's well below the 5% in 2011 and a sharp deceleration from the 2010 figure of 13.8%, according to a World Trade Organization report released April 12. WTO economists attributed the slowdown to the global economy losing momentum due to several shocks, including the European debt crisis.
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"More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile, said WTO Director General Pascal Lamy. "The further slowing of trade expected in 2012 shows that the downside risks remain high."
The preliminary 2011 growth figure of 5.0% is down 0.8 points from WTO economists' most recent forecast update in September 2011. They said there are severe downside risks for growth that could have even bigger negative consequences for trade, including a steeper than expected downturn in Europe, financial contagion related to the government debt crisis, rapidly rising oil prices, and geopolitical risks.
Developed economies had export growth of 4.7% in 2011, while developing economies had an increase of just 5.4%, well below forecasts. The relatively strong performance of developed economies was driven by a robust 7.2% increase in exports from the U.S. and a 5.0% expansion in exports from the European Union.
Things cutting into trade growth included the interruption of oil supplies from Libya, the severe flooding in Thailand, and the Japanese earthquake and tsunami, the experts said. They also cited significant exchange rate fluctuations, which shifted the competitive positions of some major traders and prompted policy responses.
In 2011, world merchandise trade grew 19% to $18.2 trillion, topping the previous peak of $16.1 trillion from 2008. Much of the growth was due to higher commodity prices, WTO said. The value of world commercial services exports increased by 11% in 2011 to $4.2 trillion. The 3.7% growth rate forecast for 2012 is below the long-term average of 6.0% for 1990-2008, WTO said.