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26.03.2009 Business & Finance

Global Trade To Shrink To Nine Per Cent-WTO

By Ghanaian Times

World Trade Organisation (WTO) Director-General, Pascal Lamy has warned that protectionism is on the rise, a measure that can 'choke off' trade as an engine of economic recovery.

Global trade is forecast to fall by 9 percent in volume terms this year, its biggest contraction since the Second World War owing to a collapse in global demand as a result of the economic downturn, the WTO reported.

The organisation said, exports in developed countries will fall by 10 percent, while exports in developing countries will fall by between 2 percent and 3 percent in 2009.

'Trade can be a potent tool in lifting the world from these economic doldrums. In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measures, which will render global recovery efforts less active,' Lamy said.

Economic contractions in most of the industrial world and steep exports declines already posted in the early months of this year by most major economies, particularly those in the Asia, make for an unusually bleak 2009 trade assessment, the WTO said in its annual assessment of global trade.

It noted that signs of the sharp deterioration in trade were evident in the latter part of 2008, as demand sagged and production slowed.

Although world trade grew by 2 percent in volume terms for the whole of 2008, it tapered off in the last six months and as well down on the 6 percent volume increase posted in 2007, the organisation reported.
Lamy highlighted the importance of trade as part of economic activity, saying that, trade growth often outpace gains on the output.

'Production for many products is sourced around the world, so there is a multiplier effect. As demands fall sharply overall, trade will fall even further,' he commented.

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