The World Bank on Wednesday said international trade will expand only 4.7 percent this year and 6.8 percent in 2013, as the European recession and a slowdown in developing countries threaten to stall global economic growth.
The bank said global trade, which includes goods and services, expanded 6.6 percent year-over-year in 2011, mainly on strong growth at the beginning of the year. Trade fell off later in the year after consumer demand in Western countries weakened and natural disasters disrupted supply chains in Japan and Thailand.
“With the recent sharp deceleration in the pace of global trade volume growth, world trade is falling once again below its pre-crisis peak volumes a milestone that it reached in December 2010,” according to the World Bank report.
The global economy will expand 2.5 percent this year and 3.1 percent in 2013, compared to the 3.6 percent growth projected in June for each year, according to the report. The bank slashed its growth forecast for developing countries in 2012 from 6.2 percent to 5.4 percent, urging countries to “evaluate their vulnerabilities and prepare for future shocks while there is still time.”
The Washington-based institution also reduced its 2012 forecast for growth in developed countries to 1.4 percent from 2.7 percent. The bank expects the economies of the 17 euro zone countries this year to shrink 0.3 percent, a 2.1 percentage point change from the institution’s last forecast.
High debt and slow growth in developed countries, along with the increased risk of oil supply disruptions in the Middle East and Africa, also threaten global economic growth, the bank said.