World Economy: Global Trade will Decrease by 9% says WTO
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New Delhi, 24 Mar. A recent report by the World Trade Organization (WTO) says that global
New Delhi, 24 Mar. A recent report by the World Trade Organization (WTO) says that global trade will decline between 2% and 10% this year. Overall, global trade is expected to drop by 9%. Only two months ago, the WTO estimated a global trade drop of only 2.8%.
The hardest hit will be the most developed countries, where trade is expected to drop as much as 10%. Developing countries could see a decrease of 2-3%.
On 2 April, the leaders from the biggest economic nations will meet at the G20 summit in London. “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 WTO Director-General Pascal Lamy.
“Many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs,” he added. Lamy said such a widespread decline in trade would be the largest drop since WWII.
“When economic troubles hit home, countries often impose import taxes or other measures to ensure their domestic producers remain in demand,” said EconomyWatch.com correspondent Hiroko Mirafiori. “This is especially true in developed countries where lower-priced competitors can come in and take a large part of the market.”
Pascal stressed the danger of protectionism, “Many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs.”
Trade in 2007 grew by 6%, and this is when the credit crunch began. It even grew in 2008 (by 2%). WTO data show that it began to shrink in the third quarter of 2008. The fact that it is falling simultaneously shows just how connected economies are.
Many had believed that some countries were protected from such global slumps, in particular the less developed nations. They felt this ‘decoupling’ effect would reduce the strains on those nations’ exports.
Many of the Asian countries that are so heavily dependent on exports, however, are actually experiencing a bit of growth. Countries such as Singapore, China, Taiwan, and Vietnam actually posted positive figures in February 2009.
Vladimir Gonzales, EconomyWatch.com
