MercoPress. South Atlantic News Agency

WTO forecasts 9% drop in global trade volume in 2009

Global trade will experience its biggest annual drop in more than 40 years this year, the World Trade Organization said Monday. In its annual trade outlook, the WTO said that the economic recession will cut the desire for the countries to do business with one another in 2009, slicing the actual volume of exports by 9%.

That performance would represent the largest 12-month drop in trade since the end of the Second World War, the WTO noted.

World trade tapered off sharply in the last half of 2008 to show growth of 2% over the whole year, after rising 6% in 2007, it said in a report.

“Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies — particularly those in Asia — makes for an unusually bleak 2009 trade assessment,” said the Geneva-based group.

Imports and exports in richer countries will drop by 10%, while trade in developing nations will fall by less — two to three per cent, the WTO said.

The WTO, which published its forecast in advance of the upcoming meetings of major industrialized countries in London, said companies that usually borrow money to buy exported goods are discovering that those funding pools are drying up because of the ongoing credit crisis.

In addition, many countries supply parts and other components for an exported product. Thus, if the demand falls for a particular item, say a car made in the United States, so does the need for parts from Canada and other countries.

Finally, the WTO said this current recession has resulted in a large number of countries cutting their import demand at the same time, a relatively unusual situation. All the financial turmoil could lead to a rise in trade barriers, the organization suggested.

“Any rises in protection will threaten the prospects for recovery and prolong the downturn,” the WTO report said.