Global trade will shrink by nine per cent this year in the most devastating collapse since World War II, the World Trade Organisation (WTO) said on Monday.

The WTO said commerce in rich countries would fall furthest, by about 10 per cent.

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 (IMF) has predicted a trade decline of nearly three per cent, 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 two per cent growth in volume terms, it stagnated over the final six months.

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

Protectionist fears

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 per cent in February from a year earlier, and 28 per cent from January.

The report said that Germany kept its place as the world's leading exporter in 2008. It sold merchandise worth US$1.47 trillion, holding off a challenge from China at US$1.43 trillion. The United States was third at US$1.3 trillion in exports.

Japan, US$782 billion, and Netherlands, US$634 billion, rounded out the top five.

Leading importers

While imports fell by four per cent in the US, it remained by far the world's largest importer last year, purchasing US$2.17 trillion worth of foreign goods.

Germany was next with US$1.21 trillion in purchases, ahead of China, US$1.13 trillion; Japan, US$762 billion; and France, US$708 billion.

- AP