World trade set to shrink 10 per cent during 2009

City A.M. Reporter
ASIA is leading a recovery in global trade, but world trade volumes are still expected to shrink 10 per cent this year, the World Trade Organisation (WTO) said yesterday.<br /><br />The WTO&rsquo;s forecast for 2009 world trade, which confirmed recent comments by its director general Pascal Lamy, is a revision from a previous forecast of a nine per cent contraction. The WTO said however the contraction appeared to be slowing.<br /><br />&ldquo;Our figures showed that Asian countries may be leading a recovery in global trade,&rdquo; Lamy said. &ldquo;There&rsquo;s no room for complacency.&rdquo;<br /><br />Trade officials at the meeting offered cautious optimism over their export outlooks, with China, which is leading hopes for a tentative global recovery, saying the decline in its exports could ease in the second half.<br /><br />Lamy said it was too early to see if measures to boost trade financing were working, after a freeze in credit markets last year dried up funding for trading firms.<br /><br />&ldquo;Has it worked? A bit too soon to say,&rdquo; Lamy said, referring to measures taken by the WTO and financial institutions to lift financing for exporters.<br /><br />&ldquo;This trade finance is in many ways the oil of world trade,&rdquo; he said. &ldquo;In this region, it appears that more oil is coming back to the market.&rdquo;<br /><br />World exports of merchandise goods grew 15 per cent in nominal terms in 2008 to $15.78 trillion (&pound;9.6 trillion), the WTO said in its latest World Trade Report. The report noted that trade rose two per cent in real or volume terms in 2008 after rising six per cent in 2007.<br /><br />&ldquo;However, trade still managed to grow more than global output, as is usually the case when production growth is positive,&rdquo; it said.