World trade is likely to shrink by nine per cent this year, the biggest contraction since the World War II, due to the global economic imbalance, the World Trade Organisation (WTO) said today.
"Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies, particularly those in Asia, makes for an unusually bleak 2009 trade assessment," the WTO said in a statement.
The contraction in the developed countries will be severe with exports falling by 10 per cent this year, WTO said, adding that in developing countries, which are far more dependent on trade for growth, exports will shrink by some 2- 3 per cent in 2009, it said.
"The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9 per cent in volume terms in 2009," it said.
This is the first decline in total world production since the 1930s, it said.
"As demand falls sharply, overall, trade will fall even further. The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries," WTO Director General Pascal Lamy said.