WASHINGTON -- The World Trade Organization on Wednesday lowered its forecast for global trade growth in 2013, saying economic improvement in the U.S. would not be enough to offset Europe’s struggles.
The dimmer outlook for trade this year follows a historically poor 2012. Global trade expanded just 2% last year, down from 5.2% in 2011.
Excluding years in which worldwide trade contracted, last year was the smallest annual increase since 1981, the WTO said.
Growth will improve this year, but not as much as forecast last fall, the WTO said.
The organization said trade would expand about 3.3% in 2013, down from its September forecast of 4.5%. The 20-year average has been 5.3% growth.
The world still is trying to fully recover from the Great Recession and financial crisis. From 1990-2008, the average annual growth in global trade was 6%.
“Improved economic prospects for the United States in 2013 should only partly offset the continued weakness in the European Union, whose economy is expected to remain flat or even contract slightly this year according to consensus estimates,” the WTO said.
Europe’s recession was a major factor in last year’s “abrupt deceleration of trade,” the WTO said. The slowdown turned out to be even more pronounced than the WTO anticipated in September, when it forecast growth in 2012 would be just 2.5%.
Slow economic growth in developed countries and “recurring bouts of uncertainty over the future of the euro” were the reasons for the sharp drop in trade last year.
This year is looking only slightly better. Economic growth in China should help cushion the slowdown, “but exports will still be constrained by weak demand in Europe,” the WTO said.
“Attempts by developed economies to strike a balance between short-term growth and increasingly binding fiscal constraints have produced uneven results to date, and finding an appropriate mix of policies has proven to be challenging,” said WTO Director General Pascal Lamy.