Page last updated at 23:13 GMT, Monday, 23 March 2009

Global trade 'will shrink by 9%'

car market in Beijing
Car exports have fallen sharply around the world

Global trade flows are set to shrink by 9% during 2009, according to a forecast by the World Trade Organization (WTO).

Hardest hit will be developed nations, where trade is set to fall 10%. Poorer countries will see exports fall 2-3%.

The WTO blames the deepening recession for the downturn, but says trade could be "a potent tool" for recovery.

It would be the biggest drop in trade since World War II, said WTO Director-General Pascal Lamy, who called on global leaders to fight protectionism.

Any further protectionist measure which will render global recovery efforts less effective
Pascal Lamy
WTO director-general

Trade is one of the top issues on the agenda when the heads of state and government of the world's leading economic powers meet at the G20 summit in London on 2 April.

"In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective," said Mr Lamy in the organisation's annual assessment of world trade.

He warned that the use of protectionist measures was on the rise, with dangerous consequences: "Many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs."

The WTO report was released while Mr Lamy was in Washington to meet key officials in the Obama administration ahead of the G20 summit.

Positive signs

While global trade grew 2% during 2008, WTO data suggest that the downturn started last summer, with trade slowing during the second half of the year.

In 2007, when the credit crunch started, world trade had still managed to grow 6%.

Unusually, global trade was now falling simultaneously around the world, the WTO said.

Some "commentators" had assumed "that a 'decoupling' effect would have made developing countries less vulnerable to economic turmoil in developed countries," but the WTO experts noted that "this has not turned out to be the case".

The WTO also warned that it was difficult to predict the depth of the global recession. "If the drop in world trade is deeper than expected or if recovery happens more quickly, then the growth forecast will need updating."

However, the WTO also reported some positive signs, with exports from China, Singapore, Taiwan and Vietnam growing again during February for the first time in months.

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