In volume terms, the rate of increase in world trade has halved in 1998.

The value of goods traded is actually expected to decline for the first time in several decades, after growing by 3% last year.

Third world exports of commodities have been hard hit

The gloomy figures heighten concerns about a global recession, as developing countries struggle to overcome mounting financial difficulties.

Economists at the World Trade Organisation (WTO) expect little recovery in trade next year - even if the the US and Western Europe escape the worst of the recession.

World exports, normally the engine of economic growth, had been growing at nearly 10% a year until 1997, and amount to $5,300bn.

Measured by the volume of trade, which strips out the effects of the high US dollar, trade growth has slowed to 4-5% - half its level of last year.

Asia in crisis

Imports into the five Asian countries most affected by the crisis - Indonesia, South Korea, Thailand, the Philippines and Malaysia - fell by one-third, while imports into Japan dropped by 19%.

The volume of exports did increase for these former Asian tigers, but because of the big drop in the value of currencies, they actually earned less while exporting more.

The value of their exports in dollar terms fell by 3%, making it harder for them to pay their massive foreign debts. Japan's recession was worsened by an 8.5% fall in its exports.

Slump in commodity prices

Developing countries were particularly hit by the sharp falls in commodity prices, which have been hurt by the fall in demand in Asia.

Oil prices fell by 30% in 1998, while non-fuel commodity prices dropped by 15%. This makes it harder for poor countries to produce enough to pay for essential imports.

Latin America was particularly affected by this, which led to a big slowdown in its import growth from 15% to 5% as the year progressed.

Africa, which depends on primary products for two-thirds of its exports, has also been severely affected.

US imports still booming

The one thing that is still sustaining world trade is the volume of imports into the US, which grew by 10%.

But exports are only growing by 3%, and the result is a growing trade deficit that is funded by borrowing and may be unsustainable.

The consumption boom in the US, which has sucked in imports, is the main engine of world economic growth at the moment. But is being fuelled by an unprecedented level of consumer borrowing, and if that were to falter, then world growth estimates would be even lower next year.

Trade talks imminent

The slump in world trade has led to fears that protectionist pressures will grow as countries try to protect their vulnerable sectors.

The WTO says that the US and some Latin American countries have toughed up their use of so-called "anti-dumping" rules, while the EU and the US have tried to block "unfair" imports of steel and textiles.

The looming trade war between the US and EU over banana imports also gives an unpromising backdrop on which to launch the latest round of trade liberalisation talks.

Nevertheless the WTO expects the next round of global trade talks to be launched in Washington at the end of next year.