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UPDATE 3-World trade to carry crisis scars into 2012 -- WTO

Published 04/07/2011, 12:47 PM

* 2011 growth forecast at 6.5 percent vs 1990-2008 avg 6.0 percent

* 2010 estimate revised up to 14.5 percent from 13.5 percent

* Projections include Japan disaster impact

* China moves up trade rankings

(Updates throughout, adds China's rise up the trade rankings, economist quote)

By Andrew Callus

GENEVA, April 7 (Reuters) - World trade will carry the scars of the financial crisis into 2012, the World Trade Organization said on Thursday with a prediction of 6.5 percent growth for this year, less than half of last year's sharp rebound.

The forecast, for growth in trade of goods as measured by export volume, is above the 6 percent average for 1990 to 2008.

The driver will in large part be strong developing economies, especially China.

But for worldwide commerce to get back on the growth track seen before a credit crunch and bank failures tipped trade into a 12 percent decline for 2009, growth would need to be an unlikely 19 percent this year, according to WTO statistics.

"The hangover from the financial crisis is still with us," said WTO Director General Pascal Lamy.

Developing country trade is projected to grow by 9.5 percent in 2011, while that of developed countries is set to grow only 4.5 percent, the WTO said.

The organisation, whose forecasts are limited to merchandise, or goods, and do not attempt to predict trends in services such as banking, also revised up its estimate of trade growth in 2010 to 14.5 percent from 13.5 percent.

It said activity had recovered more strongly in developed countries than previously thought.

The Japanese earthquake and nuclear accident have been factored into the prediction, but these disasters, together with volatile commodity prices and turmoil in the Arab world, make predictions particularly uncertain this year and the risk is to the downside, it said.

China's move up the trade rankings continued after the country became the world's top exporter of goods in 2009. The WTO data ranked it as top goods exporter again in 2010 with a 10 percent share, while in commercial services it moved up both the export and import ranks to become fourth and third respectively.

The WTO added a best and worst case scenario to its 6.5 percent forecast, with the best at 10.5 percent and the worst at 2 percent. The central 6.5 percent prediction contrasts with the 10 percent growth forecast by CPB Netherlands Bureau for Economic Policy and Analysis.

The WTO's projections for this year are based on expected gross domestic product (GDP) growth of 3.1 percent in 2011, at market exchange rates, reflecting a consensus of predictions. The WTO does not produce its own GDP forecasts.

DOHA GLOOM

Lamy presented the figures as evidence of "how trade has helped the world escape recession in 2010" and warned of the dangers of setting trade barriers such as tariffs and subsidies.

"High unemployment in developed economies and sharp belt-tightening in Europe will keep fuelling protectionist pressures," he said.

Lamy is under pressure because the so-called Doha round of WTO trade negotiations aimed at keeping tariffs, subsidies and other barriers to trade at bay is widely seen as in crisis.

The talks are almost a decade old and have stalled. Failure to secure an agreement this year could leave the talks in limbo as a number of key WTO members enter election years in 2012.

Economists agree that the WTO's work is important to keeping trade turning over.

"This is a matter for the long run," said Gerard van Welzenis of the semi-independent Dutch government body CPB.

"Even during the (financial) crisis (of 2008-2009) we might have expected governments to raise barriers, but not much happened," he said, attributing that success in part to the WTO's existence. "It's still important." (Additional reporting by Stephanie Nebehay; Editing by Louise Ireland)

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