World trade growth shrinks to 2% in 2012 – WTO
World trade growth fell to 2% in 2012, down from 5.2% in 2011, the World Trade Organisation (WTO) said April 10, 2013.
Economists at the Geneva-based institution reported that global trade growth deceleration was due to the economic slowdown in Europe which continues to suppress global import demand.
The WTO indicated that flagging output and high unemployment in developed countries reduced imports and fed through to a lower pace of export growth in both developed and developing economies.
According to the WTO, the preliminary estimate of 2% growth for world trade in 2012 is 0.5 points below its most recent forecast of 2.5% from September 2012.
In 2012, the WTO said the dollar value of world merchandise exports only increased two tenths of one per cent (i.e. 0.2%) to $18.3 trillion, leaving it essentially unchanged.
It attributed the slower growth in the dollar value of world trade to falling prices for traded goods such as coffee (–22 %), cotton (–42%), iron ore (–23%) and coal (–21%) citing IMF commodity price statistics.
The value of world commercial services exports rose just 2% in 2012 to $4.3 trillion, with strong differences in growth rates across countries and regions.
“The events of 2012 should serve as a reminder that the structural flaws in economies that were revealed by the economic crisis have not been fully addressed, despite important progress in some areas. Repairing these fissures needs to be the priority for 2013,” WTO Director General Pascal Lamy said in a statement.
According to Lamy, as long as global economic weakness persists, protectionist pressure will build and could “eventually become overwhelming”.
The threat of protectionism may be greater now than at any time since the start of the crisis, since other polices to restore growth have been tried and found wanting, he added.
To prevent a self-destructive lapse into economic nationalism, Mr Lamy advised that countries must refocus attention on reinforcing the multilateral trading system.
“Trade can once again be an engine of growth and a source of strength for the global economy rather than a barometer of instability. The way is before us, we only need to find the will,” Mr Lamy said.
By Ekow Quandzie