WTO Economists: World Trade Down

The biggest economic downturn in decades will have its impact on world trade. Economists with the World Trade Organization forecast world exports will be down by the biggest contraction since the Second World War. Developed countries will be particularly hit hard with exports falling by 10% this year. In developing countries, which are far more dependent on trade for growth, exports will shrink by some 2%-3% in 2009, according to WTO economists.

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% in volume for the whole of 2008 it tapered off in the last six months and was well down on the 6% volume increase posted in 2007.

For the last 30 years trade has been an ever increasing part of economic activity, with trade growth often outpacing gains in output. Production for many products is sourced around the world so there is a multiplier effect — as demand falls sharply overall, trade will fall even further. WTO Director-General Pascal Lamy says - as a consequence, many thousands of trade related jobs are being lost. Lamy emphasized, - 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.