World trade set for 'biggest contraction since WWII': WTO

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GENEVA, March 24 (AFP): The World Trade Organisation said yesterday that global trade would show its biggest fall since World War II this year due to the financial crisis, with a 9.0-per cent contraction expected.
"The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly nine per cent in volume terms in 2009, the biggest such contraction since the Second World War," the forecast said.
Trading volumes of the developed economies would contract 10 per cent this year, while trade in developing economies should slip 2.0-3.0 per cent.
Despite the dismal projections for the full year, the WTO pointed out that import data for China, Singapore, Taiwan and Vietnam turned positive in February following successive months of decline.
China posted an increase of 17 per cent in imports compared to January, while Singapore posted growth of one per cent.
"While this is only a single month of data, and should therefore be interpreted cautiously, it could be evidence of slowing decline and perhaps a 'bottoming out' of negative trade growth trends," said the report.
In Vietnam, February imports were up 32 per cent compared to January, which in turn was down 38 per cent from December 2008.
February imports in Taiwan gained 22 per cent over January, a sharp reversal from the 24 per cent fall in January compared to December.
But in this instance, after consecutive months of sharp decline, the data might reveal a turning point.
In 2008, world trade growth reached 2 per cent, but it "tapered off in the last six months," said the WTO.
The WTO added that it was "implausible" that trade volumes could continue to fall at the rate they been declining in the past few months.
Citing China as an example, the WTO noted that if the downturn were extrapolated according to recent export figures, then "China's exports would be approaching zero within ten months to a year".
"This is obviously a highly implausible scenario and emphasizes the reality that such steep declines as those we have witnessed recently will not persist," it said.
Nevertheless, the WTO warned of "substantial downside risks" to the overall projection.
Further adverse developments in the financial markets could prolong the crisis. Protectionism could also hurt world trade, it added.
In 2008, Germany unseated China as the world's biggest exporter, with 1.465 trillion dollars of exports in 2008.
China exported 1.301 trillion dollars worth of goods while the United States was the third biggest exporter with volumes worth 1.301 trillion dollars in 2008.
Meanwhile, the US remained the biggest importer, with 2.166 trillion dollars worth of imports.