updated 3/23/2009 4:57:24 PM ET 2009-03-23T20:57:24

Global trade will shrink by 9 percent this year in the worst collapse since World War II, the World Trade Organization said Monday.

The WTO said commerce in rich countries would fall furthest, by about 10 percent. But poorer nations may suffer the most because they are more dependent on exports for growth.

Trade has grown unabated since 1982.

"For the last 30 years trade has been an ever increasing part of economic activity, with trade growth often outpacing gains in output," WTO chief Pascal Lamy said.

"The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries."

The International Monetary Fund has predicted a trade decline of nearly 3 percent, but the WTO's forecast was far bleaker.

It said the sharp deterioration in trade was already evident late last year as demand sagged and production slowed. Although trade registered 2 percent growth in volume terms, it stagnated over the final six months.

"As a consequence, many thousands of trade related jobs are being lost," Lamy said.

He urged governments to avoid making the situation worse by boosting failing companies at the expense of foreign competitors. Policymakers fear a rise in isolationist economics could deepen the recession as happened during the Great Depression of the 1930s.

"The use of protectionist measures is on the rise," Lamy said. "The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports."

The report said even China will be unable to insulate itself from the trade collapse, as all its major trading partners are likely to show weak import demand for the foreseeable future.

It noted that China's exports fell 26 percent in February from a year earlier, and 28 percent from January.

The report said that Germany kept its place as the world's leading exporter in 2008. It sold merchandise worth $1.47 trillion, while China came in at $1.43 trillion.

The United States was third at $1.3 trillion in exports. Japan had $782 billion in exports, and Netherlands had $634 billion.

While imports fell by 4 percent in the United States, it remained by far the world's largest importer last year, purchasing $2.17 trillion worth of foreign goods. Germany was next with $1.21 trillion in purchases, ahead of China, $1.13 trillion; Japan, $762 billion; and France, $708 billion.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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