Recovery in global trade gathers pace, risks loom

A weak dollar and buoyant activity in China helped global trade grow last year, but uncertainty about the US and European economies coupled with volatile oil prices could dampen prospects of further expansion, the World Trade Organisation said Monday.

In its annual assessment of trade flows, the WTO said world trade expanded by a higher-than-expected 4.5 percent in 2003, marking the second consecutive year of growth since it suddenly slumped in 2001.

Trade flows, however, remain below an average level of 6.7 percent achieved during the 1990s.

World merchandise exports rose by 16 percent to 7.3 trillion dollars and service exports climbed 12 percent to 1.8 trillion dollars, the highest annual increases in nominal terms.

"Clearly currency movements are part of this story, the weaker dollar and strengthened euro and yen to some extent," said Patrick Low, the Geneva-based WTO's chief economist.

The WTO predicted growth in global trade could return to 1990s' levels this year, with an increase of 7.5 percent forceast if the growth in gross domestic product worldwide reaches 3.7 percent.

But it warned the projections were risky, because of "the possibility of slower than expected import growth in the United States and a faltering in demand recovery in western Europe."

The unpredictable price of oil, which is projected to fall in 2004, was also a factor, the WTO said.

"Clearly the improved economic situation in the United States and Asia has given an important boost to world trade," WTO Director-General Supachai Panitchpakdi said in a statement.

"But when you look around the world, the pace of trade growth remains uneven and there remain many barriers to trade globally," he said.

Asian economies gave among the most dynamic trade performances over the year, with merchandise exports and imports expanding between 10 percent and 12 percent, or more than twice as fast as the world level, the WTO said.

China's imports alone grew 40 percent in dollar terms while its exports jumped 35 percent, "unprecedented levels of expansion for a country with such substantial trade volume," the world trade body noted.