by Andrew Willis
EUOBSERVER / BRUSSELS - The volume of world trade is predicted to plunge by nine pecent this year, according to a World Trade Organisation annual report due out on Wednesday (25 March), in the largest contraction since World War II.
WTO director-general Pascal Lamy said the new forecast highlighted the need to kick-start world trade, with the 9 percent dip to help cause a one to two percent contraction in the world economy overall this year - the first time since the 1930s.
"Trade can be a potent tool in lifting the world from these economic doldrums," he said.
"In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure that will render global recovery efforts less effective."
Pressure is also increasing for a resumption of the Doha development round of trade talks that broke down last year.
The trade contraction in developed countries such as Germany, the world's largest exporter by volume, will be severe says the report, with WTO economists forecasting a 10 percent fall in exports.
Developing countries will see a smaller fall in the range of two to three percent, but their heavy reliance on exports for growth make this figure no less alarming.
Mr Lamy said the global credit shortage was exacerbating the problem as companies around the world struggle to finance deals.
"The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries," he said.
"As a consequence, many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures that in reality protect no nation and threaten the loss of more jobs."
EU leaders also repeated the need to reject protectionism last Friday at the bloc's spring summit in Brussels, while on the same day French carmaker Renault announced its intention to move a production plant employing 400 workers from Slovenia to a site just outside Paris. The move was supported by French President Nicholas Sarkozy.
The promises of European leaders contrast sharply with the severity of the current situation, particularly in the automobile sector.
The European Automobile Manufacturers Association (ACEA) reports that passenger car registrations were down 18 percent in Europe in February 2009, compared to the previous year. The sector is a huge provider of jobs in Europe.
The WTO's report highlights the need to unblock the banking sector as a crucial first step in tackling the problem.
Under normal recessionary conditions, consumer reticence to spend is transferred into a larger pool of savings that in turn can be lent out to businesses that are keen to invest in future production.
However, current uncertainty over assets held by banks, means this process is not taking place.
The annual report also emphasises the unprecedented global nature of the fall in consumer demand that has effected all regions of the world, but suggests that some initial signs of recovery may be visible in parts of Asia.
Source: www.euobserver.com
EUOBSERVER / BRUSSELS - The volume of world trade is predicted to plunge by nine pecent this year, according to a World Trade Organisation annual report due out on Wednesday (25 March), in the largest contraction since World War II.
WTO director-general Pascal Lamy said the new forecast highlighted the need to kick-start world trade, with the 9 percent dip to help cause a one to two percent contraction in the world economy overall this year - the first time since the 1930s.
"Trade can be a potent tool in lifting the world from these economic doldrums," he said.
"In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure that will render global recovery efforts less effective."
Pressure is also increasing for a resumption of the Doha development round of trade talks that broke down last year.
The trade contraction in developed countries such as Germany, the world's largest exporter by volume, will be severe says the report, with WTO economists forecasting a 10 percent fall in exports.
Developing countries will see a smaller fall in the range of two to three percent, but their heavy reliance on exports for growth make this figure no less alarming.
Mr Lamy said the global credit shortage was exacerbating the problem as companies around the world struggle to finance deals.
"The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries," he said.
"As a consequence, many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures that in reality protect no nation and threaten the loss of more jobs."
EU leaders also repeated the need to reject protectionism last Friday at the bloc's spring summit in Brussels, while on the same day French carmaker Renault announced its intention to move a production plant employing 400 workers from Slovenia to a site just outside Paris. The move was supported by French President Nicholas Sarkozy.
The promises of European leaders contrast sharply with the severity of the current situation, particularly in the automobile sector.
The European Automobile Manufacturers Association (ACEA) reports that passenger car registrations were down 18 percent in Europe in February 2009, compared to the previous year. The sector is a huge provider of jobs in Europe.
The WTO's report highlights the need to unblock the banking sector as a crucial first step in tackling the problem.
Under normal recessionary conditions, consumer reticence to spend is transferred into a larger pool of savings that in turn can be lent out to businesses that are keen to invest in future production.
However, current uncertainty over assets held by banks, means this process is not taking place.
The annual report also emphasises the unprecedented global nature of the fall in consumer demand that has effected all regions of the world, but suggests that some initial signs of recovery may be visible in parts of Asia.
Source: www.euobserver.com
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