In 2006 real trade growth was 8.5%; in 2007 it fell to 5.5%. Mostly this was because of a slowdown in import demand in the industrial countries linked in no small measure to the rise of commodity prices, in oil and food - particularly oil.
"The rate of trade growth is going to continue to fall. We are predicting an export growth rate of 4.5% in real terms for 2008," says World Trade Organization chief economist Patrick Low. "This prediction is based on a number of downside factors. It’s based on today’s information, but there are a number of downside factors which may well influence this estimation in the months to come."
According to Low the effects of the financial crisis, some of which have not filtered into the real economy in many parts of the world; fears about inflation; business uncertainty; and continued rises in commodity prices all will play a part in trade growth in 2008.
"Trade will become more important as you look into the medium to long term," Low says. "And I think first and foremost open trading arrangements play a significant role in smoothing markets, in getting food where it needs to go to, in making sure there’s as much efficiency as possible in food production."
WTO Director-General Pascal Lamy agrees that there is a lot of uncertainty in the global economy and that more than ever the trade system needs to be transparent, predictable and equitable.
"A reinforced trading system is an essential anchor for economic stability and development," says Lamy. "Clearly, the best way to achieve this is to conclude the Doha Development round. The time for posturing and delay has ended. What we need now is action."
While trade growth is slowing in the developed world, the WTO projections show that developing economies will record faster growth in imports than exports in 2008.