World trade growth to slow further this year - WTO

By Jonathan Lynn

GENEVA (Reuters) - World trade growth will slow to a six-year low in 2008 although financial market turbulence and slowdowns in some developed economies have so far had little effect, the World Trade Organisation (WTO) said on Thursday.

The WTO, whose output projections are based on IMF and United Nations forecasts, said strong growth in some developing countries would help offset the effects of an economic slowdown in the United States and Europe. Strong commodity prices and a reduced reliance on exports to developed markets are benefiting some developing economies.

World trade growth will slow to 4.5 percent this year from 5.5 percent last year and 8.5 percent in 2006, the WTO said.

WTO economists said the forecast was based on expected growth of 2.6 percent in world output this year. Major developed markets are expected to grow 1.1 percent and developing countries by more than 5 percent.

But trade projections are unusually difficult to gauge this year because of financial market turbulence which has reduced economic growth prospects for developed markets.

"These are uncertain and troubling times for the global economy," WTO Director-General Pascal Lamy said in a statement.

"To date, the financial market turmoil, significant price surges and the slowdown of developed economies have not led to a disruption of trade."

But Lamy said protectionist pressures were building and it was necessary to strengthen the global trading system with transparent, predictable and fair rules. A conclusion of the Doha liberalisation round was the best way to do this, he said.