Protectionism could cause extended harm: World Bank

GENEVA (Reuters) - More governments might seek to limit trade in the months ahead if the global economic recession continues, World Bank President Robert Zoellick said on Monday.

"High-income countries have used subsidies for troubled industries, while low-income countries are using selective increases in border barriers," he told a conference at the World Trade Organization in Geneva.

"These trends could easily spin out of control in coming months as unemployment rises and one country feels compelled to respond tit-for-tat to the policies of another," Zoellick said, warning this was akin to "playing with fire."

Developing countries that depend on a small number of traded products for their economic activity -- such as Bangladesh and Cambodia, where garments make up 75 percent of exports -- could face long-term difficulty from barriers to their goods, he said.

"When global growth recovers, protectionist actions that prevent developing countries from benefiting from the pick-up will protract the suffering," he said.

Trade is one of many planks on which a global economic recovery will be build, according to Zoellick, a former U.S. Trade Representative.

"Trade was one of the first sectors decimated by contracting consumption in high-income countries. But it will also be one of the first sectors to recover once the global economy picks up steam," he said. "Those countries that position themselves now to take advantage of renewed trade will accelerate out of recession with the fastest momentum."

(Reporting by Laura MacInnis and Katie Reid; Editing by Richard Balmforth)