GENEVA — Global trade in 2008 is projected to increase at the lowest rate in six years because of turmoil in financial markets and the sharp economic slowdown in the U.S. and other major economies, a new report said Thursday.
The study by the World Trade Organization predicted that trade volume would go up 4.5 percent, or 1 percent less than 2007. However, the report cautioned that there are considerable downside risks. The WTO warned that a stronger economic downturn “could cut trade much more sharply, to significantly less” than the level forecast.
The organization’s chief economist, Patrick Low, told reporters that projections will probably have to be revised in the third or fourth quarter.
Last year, boosted by results from robust emerging economies such as China and India, global trade in value terms increased 15 percent to $13.6 trillion, the study said. The disparity between the rate of increase in trade volume and value is largely attributed to the weakened dollar, since global trade is calculated on U.S. currency.
The report, “World Trade 2007 and Prospects for 2008,” said the fastest-growing major emerging economy, China, posted a 26 percent increase in exports to $1.2 trillion last year, which elbowed out the U.S. as the world’s second-largest exporter, behind top-ranked Germany. The U.S. was positioned third with $1.1 trillion in goods exports, up 12 percent.
Low said emerging countries accounted for more than half the world’s trade growth last year. South Asia’s most dynamic economy, India, moved up two slots to be the 26th largest exporter, with shipments worth $145 billion, a 20 percent gain from the year before.
Last year, the U.S. remained the world’s top importer with a 5 percent increase in the value of shipments to $2 trillion, followed by Germany with a 17 percent advance to $1 trillion, and China in third place with $956 billion, up 21 percent.
The report said U.S. imports from China “rose by 12 percent, more than twice as fast as total imports, despite very weak U.S. import demand in electronic goods and clothing,” two key sectors of U.S. imports from China.Energy-rich Russia, flush with huge increases in export revenues, notched a 35 percent rise in imports to $223 billion. A significant increase was also reported by India, with imports up 24 percent to $217 billion, and Turkey, which was up 22 percent to $170 billion.
WTO director general Pascal Lamy said the economic turmoil has not led to a disruption in global trade, but noted “protectionist pressures are building as policy makers seek answers to the problems that confront us.” He said the best way to reinforce the global trading system is to conclude Doha global trade talks, launched in November 2001 and aimed at lowering tariffs and other barriers to global commerce.