The World Trade Organization said that economic shocks like the euro zone debt crisis are behind an expected slowdown in global trade growth to 3.7% in 2012 from 5% in 2011.
The WTO said that the world economy had lost momentum as the 2011 figure fell below its September 2011 forecast of 5.8%.
The body said that multiple setbacks during the year had dampened trade growth more than forecast, resulting in a stronger than expected easing in the last three months of the year. In addition to the euro zone debt crisis, WTO economists cited the effects of the Japanese earthquake and tsunami and severe flooding in Thailand.
A year ago, the Geneva based body had predicted 6.5% growth for 2011 after a rebound of 13.8% in 2010 following the financial crisis. The WTO expects trade to recover somewhat by 2013 and result in additional growth of 5.6%.
Mr Pascal Lamy chief of WTO warned that "More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile. The further slowing of trade expected in 2012 shows that the downside risks remain high. We are not yet out of the woods."
The latest WTO forecast assumes growth in global production this year of 2.1%, down from 2.4% in 2011. In 2011 however, developed countries exceeded export expectations with growth of 4.7%, driven by a 7.2% rise in exports from the United States.
But the 5.4% 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.
( Source: Steelguru.com )