World trade contracted in 2001 but should stage a modest recovery this year, according to the World Trade Organisation's latest report, released today.
The WTO said world trade is expected to expand only marginally this year because of "sober prospects" for the IT sector.
The value of exports fell 4 per cent to $6 trillion in 2001, the largest annual decrease recorded since 1982. All three major merchandise product groups — agricultural products, mining products and manufactures — suffered.
The fourth quarter of 2001 saw a particularly sharp downturn with the volume of world exports 6 per cent below the level recorded in 2000.
Three factors played a major role in this stronger than expected global slowdown: the bursting of the global information technology (IT) bubble; the sluggishness of demand in Western Europe; and to a much lesser extent the on September 11th terrorist attacks .
Developing countries suffered the worst of the downturn due to the marked contraction of shipments of IT products from the East Asian traders such as Singapore and Taiwan.
Least-developed countries’ exports and imports are estimated to have stagnated in 2001, accounting for only 0.5% of all world trade.
The WTO warned that the rate of recovery will be slower in recent years because of lowered expectations for demand and investment growth in the IT sector, combined with higher transaction costs — a fallout from September 11th 2001.