The World Trade Organization (WTO) recently issued a gloomy forecast for world trade in 2009, projecting a nine percent decline in total exports in volume terms from the previous year due to the collapse in global demand brought on by the current economic downturn. The WTO believes that this decline, the largest since World War II, will be even more severe in developed countries where exports are expected to drop by ten percent. In developing countries, which the WTO notes are far more dependent on trade for growth, exports are expected to decline by two to three percent this year. Signs of this pronounced deterioration in trade were evident during the latter months of last year, according to the WTO, as global demand lost considerable steam and production decelerated. Available data for the first two months of this year already shows large declines in merchandise trade for most major economies, with the exception of certain economies in Asia.
Despite the large magnitude of the projected decline, the WTO advises that there are still “substantial downside risks” to this projection. For example, a surge in protectionist measures and/or further adverse developments in financial markets could deepen and extend the recession, as could a sluggish recovery in consumer spending. On the other hand, the WTO believes that “growth could resume more quickly than expected if reforms to the financial sector are implemented quickly and credit markets begin to function more normally.”
To read more about the predicted trade decline, visit WorldTrade/Interactive at http://www.strtrade.com/wti/wti.asp?pub=0&story=30625&date=3%2F27%2F2009&company=
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