The World Trade Organization says international trade is expected to grow by only 2 percent this year, compared with 12 percent a year ago. WTO says the September terrorist attacks in the United States have created further economic uncertainty.
WTO's director of economic research, Michael Finger, says mounting global economic and commercial uncertainties could slow trade growth to 2 percent, or even less, in 2001. "Now, this 2 percent estimate was made after the 11 of September, but without knowing exactly what are the repercussions," he said. "Six weeks later, we have some indications on airline traffic, new estimates on consumer confidence, investor confidence, and, of course, all of this points to a very dramatic deceleration in the fourth quarter."
Mr. Finger says the terrorist attacks have hit hard at major international industries, such as airlines, tourism, and cargo shipment. He says that is in addition to the economic slowdown already caused by the fall in demand for information technology products. Mr. Finger says consumer confidence is key to economic recovery. "Unforseen events are not incorporated in the model, and you don't know how the consumers will react," said Michael Finger. "Of course, the first thing is that confidence is even further eroded. That is the most critical thing in a recession. Confidence has got to come back."
In May, the WTO predicted 7 percent growth for the year. The last time that trade growth fell below 2 percent was in 1982, following a rise in oil prices.
The WTO report says political tension resulting from the terrorist attacks and diversion of resources to fight the global war on terrorism are sure to have a heavy impact on world economic growth.