Global trade expected to slow in 2012

Europe’s sovereign debt crisis and the aftershocks of events such as the Japan earthquake and Arab Spring are expected to slow the growth in global exports to just 3.7 percent in 2012, the World Trade Organization said Thursday.

That comes after a slowdown to 5 percent in 2011 and 13.8 percent in 2010, the global trade body said in its annual report. The figures represent the total volume of merchandise exported across borders, accounting for changes in prices and exchange rates.

"More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile," WTO chief 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 global forecasts are remain uncertain due to potential volatility caused by the eurozone crisis, U.S. debt concerns, economic aftershocks of the Japan earthquake and nuclear crisis, flooding in Thailand and the impact of continuing political unrest in the oil-rich Middle East.

The slowdown in 2012 would bring trade growth below the world average rate of 5.4 percent over the last 20 years, the WTO said. Developing economies are expected to lead the growth in goods traded this year with a forecast 5.6 percent increase in exports, compared to 2 percent for industrialized nations.

The forecast assumes a global output growth of 2.1 percent, down from 2.4 percent last year.

Lamy warned that protectionism could rise among governments grappling with the slow trade growth.

"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," he said.

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