World trade volumes have fallen in the second half of 2008, according to new estimates being finalised by the World Trade Organisation, and look set to continue declining at least until the middle of next year. Last spring, the WTO predicted world trade growth this year of 4.5 per cent in real terms, down from 5.5 per cent in 2007. Yesterday, it revised up, to 6 per cent, the growth figure for 2007, but it has not yet published its latest prediction for 2008.
WTO economists said yesterday that they expected world trade growth this year to be less than 4.5 per cent but still positive, pulled up by exceptionally strong trade growth in the first quarter of 2008, which was boosted by booming imports into China and oil-exporting countries.
However, China's imports have since slowed sharply, dashing hopes that it would drive the world economy towards recovery. US imports have been declining and Japan is likely to see overall negative import growth this year. "Emerging economies are not as decoupled from the US and other industrialised countries as many hoped," said a WTO economist.
The turbulence in the financial system and the fall in commodity prices, especially oil, has cut the spending power of oil exporters.
US consumer spending is expected to stay weak in response to falling house prices, rising unemployment and the need to cut household debt. "The financial crisis has not unfolded completely and the impact on the real economy may just have started," the economist said.
For instance, the slump in car production will not only have a direct impact on trade volumes, but will feed through into falling demand for steel and iron ore, pushing prices down for exporters of these goods.
World trade gloom will reinforce the warnings by Pascal Lamy, WTO director-general, against protectionism, which he argues risks deepening and prolonging the recession. Year-on-year, world trade last fell in 2001, after the dot-com bubble.
WTO economists said yesterday that they expected world trade growth this year to be less than 4.5 per cent but still positive, pulled up by exceptionally strong trade growth in the first quarter of 2008, which was boosted by booming imports into China and oil-exporting countries.
However, China's imports have since slowed sharply, dashing hopes that it would drive the world economy towards recovery. US imports have been declining and Japan is likely to see overall negative import growth this year. "Emerging economies are not as decoupled from the US and other industrialised countries as many hoped," said a WTO economist.
The turbulence in the financial system and the fall in commodity prices, especially oil, has cut the spending power of oil exporters.
US consumer spending is expected to stay weak in response to falling house prices, rising unemployment and the need to cut household debt. "The financial crisis has not unfolded completely and the impact on the real economy may just have started," the economist said.
For instance, the slump in car production will not only have a direct impact on trade volumes, but will feed through into falling demand for steel and iron ore, pushing prices down for exporters of these goods.
World trade gloom will reinforce the warnings by Pascal Lamy, WTO director-general, against protectionism, which he argues risks deepening and prolonging the recession. Year-on-year, world trade last fell in 2001, after the dot-com bubble.