The latest report from the World Trade Organization (WTO) offers bad news for exporters, noting that the 2010 “rebound” of 13.8% growth faded badly in 2011 to just 5% and is set to fall again, to 3.7% this year.
WTO economists have attributed the continuing slowdown to the global economy losing momentum due to a number of shocks, including the European sovereign debt crisis.
“More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile,” WTO Director-General Pascal Lamy said. “The further slowing of trade expected in 2012 shows that the downside risks remain high. We are not yet out of the woods.”
The present trade forecast assumes global output growth of 2.1% in 2012 at market exchange rates, down from 2.4% in 2011, based on a consensus of economic forecasters.
However, the WTO warns that there are severe downside risks for growth that could have even greater negative consequences for trade if they came to pass. These include a steeper than expected downturn in Europe, financial contagion related to the sovereign debt crisis, rapidly rising oil prices and geopolitical risks.
Economic prospects have improved in the USA and Japan, as labour market conditions improve in the former and business orders pick up in the latter, but these positives will only partly make up for the earlier negatives.
Meanwhile, the European Union may already be in recession.
The WTO figures rather contradict popular perceptions with regard to developing and developed economies. The report shows that the latter exceeded expectations with export growth of 4.7% in 2011, while developing economies (for the purposes of the analysis this includes the Commonwealth of Independent States) did worse than expected, recording an increase of just 5.4%.
More details are available on the WTO website.
