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The worst may not yet be over for the global economic crisis as world trade could continue to contract by another 10 percent in volume terms this year, Pascal Lamy, director general of the World Trade Organisation, told CNBC.
“We’re not out of the woods yet,” Lamy told CNBC at the APEC summit in Singapore.
“World trade this year should contract by 10 percent in volume terms, which is a huge drop,” he said.
Some regions, notably in Asia, are starting to see the rate of decrease slow down, according to Lamy. But there is still an imbalance of supply and demand, he said.
Global supply needs to readjust to the weaker demand caused by the recession before trade can start to recover properly, he said. But the WTO cannot help stimulate demand, Lamy pointed out.
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“We can make sure we don’t make things worse by protecting trade, which is called protectionism,” he said.
Lamy said that protectionist pressure had risen since the recession took hold and the problem was global because of the global nature of the recession.
“As was to be expected, in times of social and economic hardship people ask for protection. But we all know that protecting trade is the worst way of offering protection,” he said.
Lamy also said that he expects the Doha trade talks to be successfully revived because the new administrations in America and India may not repeat the problems of previous talks.
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