| GENEVA, Sept 28
GENEVA, Sept 28 Trade flows are likely to slow
this year as consumers worried about the financial crisis cut
back spending and a cyclical downturn bites into exports and
imports, economists said.
But the crisis itself has so far had only a moderate impact
Exports and imports have been slowing markedly since the
second quarter after growing strongly in the first, said Michael
Finger, senior economist at the World Trade Organisation (WTO).
"What we know already from the first seven-eight months is
it's not a catastrophe, it's weakening. I don't see any panic or
huge changes, it's relatively gradual," he told Reuters.
Trade would of course be vulnerable to a prolonged
seizing-up of the banking system as commerce is financed by
The picture is not quite as favourable as at first sight,
because export and import figures earlier this year were
inflated by record fuel prices.
In addition, business confidence has fallen to a three-year
low in Germany, Europe's biggest economy which is powered by
exports, and has also tumbled in the second biggest economy,
The head of shipping firm Excel Maritime Carriers Ltd
EXM.N warned last week that banks were no longer lending to
fund trade, and cargoes were being left stranded on docks even
though the demand for goods is there.
But the slowdown in trade reflects a cyclical economic
downturn rather than the immediate impact of the financial
crisis, economists said.
"So far we've been fairly lucky when it comes to the effect
on fundamental trade from the financial crisis," said Fredrik
Erixon, head of Brussels trade policy think-tank ECIPE.
"I think trade volumes are certainly going down but that has
principally been a consequence of the global economic slowdown
rather than early signs of financial problems."
True, there have been some warning signs.
Japan announced its biggest monthly trade deficit in 25
years last week as exports to the United States fell a record 22
percent in August.
But U.S. exports are on a roll, up 18.3 percent so far this
year despite a trade deficit fuelled by record oil prices.
Consumers in many rich countries are cutting their spending
because of worries about their financial assets and pensions,
falling house prices and recent record fuel prices.
But companies making capital goods such as trucks or steel
are doing well on strong investment demand from emerging
markets, especially oil producers, Finger of the WTO said.
Trade between Asian countries is holding up well, he said.
There are risks ahead for trade, economists said.
-- Oil prices have now fallen more than a quarter from their
July peak, which could prompt Gulf states and Russia to rein in
spending, especially if the decline continues;
-- The financial turmoil of the past few weeks, which could
dent consumer confidence further, is not yet reflected in trade
-- Retailers like Wal-Mart Stores Inc (WMT.N) will place
their orders for the pre-Christmas buying season over the next
couple of months. If their reading of consumer confidence is
gloomy that would hurt Asian exporters of electronics goods.
-- Several European economies are slowing or falling into
recession, provoked by the pricking of housing bubbles or the
financial crisis in the cases of Ireland, Spain and Britain.
Trade between European countries accounts for one third of
the world total.
As a result the WTO is likely to revise down its projection
of trade growth this year from the six-year low of 4.5 percent
it forecast in April when it reviews the figure next month.
(Editing by Tim Pearce)