Global trade growth is expected to slow to a six-year low of 4.5 per cent this year but China has overtaken the US as the world's second-biggest exporter, the World Trade Organisation (WTO) said yesterday.
Heavily influenced by the turmoil in financial markets and the sharp economic slowdown in leading western economies, global merchandise trade is forecast to rise by 4.5 per cent this year, against last year's 5.5 per cent.
But the WTO gave warning that a stronger slowdown in global economic growth “could cut trade much more sharply, to significantly less” than the projected level of 4.5 per cent.
Dr Patrick Low, WTO chief economist, said that in view of the downside risks, the agency will probably have to revise its projections in the third or fourth quarter of this year.
The turmoil in the financial markets, he said, “has not yet fed through, as it might, in the real economy.”
WTO economists are also sceptical about how long emerging developing countries that have spearheaded global growth “can maintain a strong pace in the face of sluggish demand in major developed markets and rising inflationary pressures.”
In 2007, buoyed by strong performances by dynamic emerging economies such as China. India, Brazil, and Russia, world merchandise trade in value terms increased by 15 per cent to $13.6 trillion (£6.8 trillion).
Emerging countries accounted for more than half of the world's trade growth last year, Mr Low added.
Meanwhile, trade in commercial services, boosted by big increases in transport and travel services, last year increased by 18 per cent to $3.3 trillion, said the WTO.
Another stellar performance by China, which recorded a 26 per cent rise in its merchandise exports to $1.2 trillion, enabled it to surge ahead of the US to be ranked the world's second biggest exporter and is breathing down the neck of top-placed Germany.
The UK's decline in recorded exports of 3 per cent to $436 billion, associated with fraudulent VAT declarations, pushed it down one slot to eighth place behind Italy.
However, the UK retained its position as the world's second largest commercial services exporter, after the US, by registering a 17 per cent increase to $263 billion. Pascal Lamy, WTO director-general, said that the turmoil had not so far led to a disruption in global trade but cautioned, “protectionist pressures are building as policymakers seek answers to the problems that confront us.”
He said that the best way to reinforce the global trading system would be to conclude the Doha global trade talks, which were launched in November 2001.
Mr Lamy told senior trade envoys yesterday that with the global economy “in rough waters”, concluding the Doha round “can provide a strong anchor for the world economy.”
Ministers from about 30 leading trading nations, including the EU, the US, Brazil and India, are tentatively expected to meet in Geneva in the second half of next month to try to reach a breakthrough deal to lower barriers to trade in farm products, industrial goods and commercial services. Previous efforts had ended in failure.