The World Trade Organization's (WTO) annual report finds world-trade growth slowed to 5.5 percent in 2007 from 8.5 percent the year before. WTO predicts global trade growth will continue to slow this year. Lisa Schlein reports for VOA from the launch of the WTO report in Geneva.
The World Trade Organization says the global financial crisis is having a negative impact on world trade. But, it says the results are uneven, with the wealthier countries generally doing worse than the poorer countries.
The report notes the steam has gone out of the U.S. economy, which it says has lost its position as the engine of global growth.
The report says the financial market turbulence has considerably reduced economic growth projections for some major developed markets and has clouded the prospects for world trade in 2008. It says the U.S. sub-prime mortgage and banking crises are likely to further depress global trade growth.
It expects economic growth in the United States will be flat this year and will have repercussions elsewhere, especially in Europe later in the year.
WTO Senior Economist, Michael Finger, tells VOA the strength of the oil and commodity prices is another worrying factor.
"The oil importing countries will have to adjust to the much higher cost of energy and this erodes the purchasing power of consumers and increases the cost for business and this is will have a further adverse affect," he said. "To some extent this already is cooperated in our calculations and so we expect that world merchandise trade in real terms will expand only by 4.5 percent this year, which is the lowest growth since 2002."
The WTO reports world trade will continue to slow markedly in 2008, but not all regions will suffer. It notes Mexico and Canada, which are closest to the United States, will feel the brunt of the slowdown. But repercussions will be smaller among European countries that trade with each other.
The report says the European transitional economies, such as Russia, are showing strong growth, as are Central and South America, Africa, the Middle East and Asia. It notes the most populous developing countries, China and India reported outstandingly high economic growth last year.
Finger says even Africa is doing better than the developed countries, with economic growth rates of about five percent.
"Africa, the region as a whole, is a huge net exporter of fuels," he added. "So, quite a number of African counties have export revenues, which doubled over the last three years. But, of course, there are also countries in Africa which are net importers of energy, net importers of food and these countries are suffering from the high prices of energy and food."
WTO Director-General Pascal Lamy acknowledges the global economy is going through an uncertain and difficult period. But, he warns protectionist policies surfacing in some countries are no solution to these problems. He says a reinforced trading system is an essential anchor for economic stability and development.