Bridges Weekly Trade News Digest • Volume 13 • Number 11 • 25th March 2009
World Trade Will Drop 9% in 2009: WTO
Discuss this articleShare your views with other visitors, and read what they have to say
World trade flows will fall by roughly 9 percent this year – the biggest drop in more than 60 years – thanks to the ongoing economic downturn, the WTO said Monday.
Global trade grew by just 2 percent in 2008, not the 4.5 percent that was forecasted a year ago, the WTO said, attributing the over-estimation to the unexpected and very sharp drop in global production in the final quarter of 2008.
The marked drop in trade has been triggered in part by a rapid contraction in the availability of credit to finance the movement of imports and exports, the report concluded. A decline in asset prices, weakened demand, and decreased production also contributed to the decline.
“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. The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries,” said WTO Director-General Pascal Lamy.
Growth in real global output amounted to 1.7 percent last year, down from 3.5 percent the year before. In 2009, the WTO predicts world production will fall by between 1 percent and 2 percent, marking the first decline in global output since the 1930s.
WTO Director-General Pascal Lamy warned that as demand falls sharply overall, trade will tumble even further.
“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 measure which will render global recovery efforts less effective,” said Lamy, referring to a gathering of key heads of state that is set for 2 April.
Many government-led programs aim to address the economic crisis through policies such as bank bailouts and mortgage assistance for homeowners. But, the WTO reports warned, conventional monetary policy may be reaching the limits of its effectiveness, with interest rates in the United States and elsewhere approaching zero. Economic recovery may now depend on the effectiveness of proposed fiscal stimulus plans.
ICTSD reporting.
One response to “World Trade Will Drop 9% in 2009: WTO”
Add a comment
Enter your details and a comment below, then click Submit Comment. We’ll review and publish the best comments.
World economies are being bailout by financial institutions mainly to stimulate local and international credit. But, martkes are not only concentrated in food or commodities goods and services, markets and trade organizations are concentrated in the production, sales and aquisition of weapons as well.
I do not think that bailouts are there to improve those industries, instead all forms of bailout assistances are there to help large and small economies, meaning and especially, those industries that are related to food, construction, education and interprenues, because those areas are to help us to build back the world as it was before.
Now,world infrastructures, moral issues and trust are in decline, and I wonder if the WTO is working, to create trust and confidency to each nation.
Is the WTO and ILO (International Labor Organization)working together on those current world issues?
Wars put us apart, economic crisis put us together, so is NATO asking its members to reduce the production and adquisition of weapons to unify the world ? , after all, each person lives once only and must engoy this planet.
Is this current crisis a weaking call for world unification ? If so, is the world coca and opium illegal production donwturn? Is the Interpol after every criminal? Is local police part of the local corruption ?
When can human community be unified and live in peace?
Kirk Nelson, Pres.
wesolutions.org
New York, NY. USA