The Geneva-based World Trade Organization (WTO) on Friday cut its forecast for global trade growth by more than one percentage point each for 2012 and 2013, arguing that Europe’s economic woes are spilling over into economies around the globe.
The WTO Director General Pascal Lamy said the volume of traded goods would expand by 2.5% this year and by 4.5% next year, down from the previous estimates of 3.7% and 5.6%, respectively.
“In an increasingly interdependent world, economic shocks in one region can quickly spread to others,” WTO Director General Pascal Lamy said.
He added that the European Union’s measures to stabilize the euro and US steps to support growth were therefore very welcome.
Much of the revision was due to falling demand for foreign goods in the EU, which accounts for 60 per cent of imports to developed countries.
This downward trend, along with softening demand from China, has hurt trade in developing countries, especially in Asia, the WTO said.