24 March,2009 06:17 AM IST | | IANS
The World Trade Organisation (WTO) Monday said the volume of global trade was expected to contract by nine per cent this year, the largest such contraction since World War II and significantly worse than had been predicted.
The contraction in developed countries would be particularly severe, with exports falling by 10 per cent this year, while in developing countries exports would shrink by some two-three per cent, according to a statement released by the WTO.
Global trade has been consistently growing since 1982.
International Monetary Fund (IMF) estimates earlier this year had predicted a trade decline of nearly three percent.
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"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," WTO Director General Pascal Lamy said in the statement.
Poorer nations "are far more dependent on trade for growth" than industrialised countries, according to the WTO.
The WTO also predicted the first decline in world production since the 1930s.
"As a consequence, many thousands of trade related jobs are being lost," said Lamy, warning against protectionism, which is on the rise.
"In London, G20 (Group of 20) 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," Lamy said.
Also in Geneva Monday, the head of the IMF, Dominique Strauss-Kahn called on governments to work together to fight unemployment, but stressed that the real economy was dependant on the health of the financial sector.
"If we care about unemployment, we must renew the financial sector", said Strauss-Kahn, addressing the International Labour Organisation.
Also commenting on the reduced amount of capital available in the developing world, the IMF chief said those countries would have to rebuild their fiscal models and learn to live with reduced capital inflows.
