World trade growth will slow for a second year to 3.7% in 2012 but “severe” downside risks could drive it further below the 20-year average of 5.4%, the World Trade Organization forecast on Thursday.
Trade growth slowed to 5.0% in 2011 from 13.8% in 2010, and is provisionally expected to rebound to 5.6% in 2013. The figure for 2011 was worse than a provisional forecast of 5.8% issued in September.
We are not yet out of the woods, WTO Director General Pascal Lamy said.
The WTO has so far deterred economic nationalism, but the sluggish pace of recovery raises concerns that a steady trickle of restrictive trade measures could gradually undermine the benefits of trade openness.
The main downside threats to trade growth this year were from a deep recession in the Euro zone, a worsening sovereign debt crisis and commodity prices, as well as geopolitical risks.
Lamy said this year's trade outlook was largely dependent on the seemingly diverging fortunes of the European and US economies, the world's top two trading powers.
Which of these two developments will exert greater influence on global demand this year will in large part determine the course of trade in 2012, Lamy told a news conference.
The 2012 forecast, based on projected global economic growth of 2.1%, includes a slump in exports of goods from developed countries to 2.0% from 4.7% in 2011.
Exports from developing countries, a grouping that includes Russia, are expected to improve slightly to 5.6% from 5.4% in 2011.
Although developing country export growth slowed in 2011, it was faster than expected, partly because of a robust 7.2% increase in exports from the United States and a 5.0% increase from the European Union.
The US trade figures were buoyed by net exports of fuels, excluding crude oil, partly reflecting coal shipments to Japan after it was hit by an earthquake and tsunami in March, a catastrophe that contributed to Japanese exports falling 0.5% during the year.
The tsunami disrupted global supply chains and weighed on Chinese trade, while developing country export growth was also pulled down by the Arab Spring and the civil war in Libya, which contributed to an 8.3% fall in African exports.
The 2011 ranking of top trading powers remained almost unchanged from 2010, although Russia rose to be the ninth biggest exporter of goods, up from 12th, and Britain overtook Germany as the world's second largest exporter of services.