World trade, a key motor of global growth, looks set to stagnate this year under the impact of SARS, the Iraq war and economic and political uncertainty, the World Trade Organisation said on Wednesday.
Top economists from the Geneva-based body also told a news conference that a cautious forecast in its annual spring report that trade might expand by between 2.5 to three per cent could well be revised downwards in the coming weeks.
"Considerable uncertainty clouds trade growth prospects for 2003," the report said. "The downside risks on predictions.... are large."
WTO economists Patrick Low and Michael Finger said that they had already been compelled to lower their original forecast for this year of five per cent growth in trade volume to follow a relatively poor 2.5 per cent increase last year.
But if the deadly SARS -- or Severe Acute Respiratory Syndrome -- rebounds severely on the economy of trading giant China where it is believed to have originated, the impact would be felt around the globe, they said.
"The immediate effect would be in East Asia, because of the large amount of inter-regional trade, but the economic consequences would spread to other areas without a doubt.... Everything is so interlinked," said Finger.
In Singapore, analysts at leading international banks said the rampant Chinese economy may already be stalling.
And in Tokyo, government figures released on Wednesday showed Japanese exports slowing to a crawl amid fears over the effects of SARS -- which has now killed some 250 people worldwide, nearly half of them in Hong Kong.
Major business attraction
The effects on China -- a major attraction for international business since it joined the WTO at the end of 2001 -- were likely to be sharpened by a warning against travel to Beijing issued on Wednesday by the World Health Organisation.
The WTO figures showed that China had helped keep international trade buoyant in 2002 by increasing its own imports and exports by around 20 percent, ousting Britain from fifth place among top world traders.
Finger said initial indications were that it had kept up this momentum in the first two months of the year, at a time when it was keeping the SARS outbreak firmly under wraps.
The report said the predicted world trade rise for this year -- well below the average of 6.7 per cent throughout the 1990s and the 12 per cent record of 2000 -- would depend on a pickup in global production and consumer demand from April.
But in a comment with the report, WTO Director-General Supachai Panitchpakdi suggested this was far from certain in the present world political and economic climate.
Governments and economists had been hoping for a global trade surge this year to put well behind the disaster of 2001 -- when trade volume declined, by one per cent, for the first time in decades.
The report said last year's upturn -- to a total value of $6.24 billion -- had been driven by strong demand in the United States and the bigger Asian economies, but was held back by a sluggish performance in Europe and Latin America.
Growing uncertainty
Supachai, a former deputy prime minister of Thailand, said the figures reflected "growing economic and political uncertainty in the world today" which could give rise to even greater global instability.
One way to tackle this, he suggested, would be for governments to speed up efforts to complete the deeply troubled Doha Round of liberalisation talks launched in November 2001 and due to end with a new world trade treaty by January 1, 2005.
The negotiations -- which the World Bank says could give a huge boost to the world economy if successful -- have already missed some important deadlines and many analysts say they are likely to drag on well into the second half of the decade.
The WTO report, written before the controversial US - British invasion of Iraq last month which toppled President Saddam Hussein, suggested that the decision by the two powers to go it alone could have serious repercussions on trade politics.
It said the intervention -- launched without the final approval of the United Nations and in the face of opposition from major powers like Germany, France and Russia -- could endanger the system of global governance through bodies like the WTO.
"The erosion of confidence in global institutions could encourage the creation of like-minded blocs" -- diplomatic phrasing for closed groupings of trading states -- "and inward- looking policies" -- or protectionism -- said the report.
International trade rules are currently set in multilateral negotiations involving all WTO member-countries, presently totalling 146. But many analysts fear the current trend to regional trade pacts could become a landslide, sidelining the WTO and further marginalising many developing countries.
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