Geneva  - The World Trade Organization on Monday said the volume of global trade is expected to contract by 9 per cent in 2009, the largest such contraction since World War II and significantly worse than previously predicted.

The contraction in developed countries would be particularly severe, with exports falling by 10 per cent this year, while in developing countries exports would shrink by some 2-3 per cent, according to a statement released by the WTO.

Global trade has been growing consistently since 1982.

In 2008, estimates said, global trade grew by 2 per cent - the slowest rate since 2001- but this was mostly due to growth in the first half of the year that tapered off in the last six months, as the financial crisis spread across the world economy.

Last year's growth "was well down on the 6-per-cent volume increase posted in 2007." Developed economies posted modest growth of 0.8 per cent.

Germany was the world's leading merchandise exporter last year, shipping 1.47 trillion dollars worth of goods, followed by China.

The auto industry was said to be one of the hardest hit sectors by the downturn.

International Monetary Fund (IMF) estimates earlier this year had predicted a trade decline of nearly 3 per cent for 2009.

"As demand falls sharply overall, trade will fall even further. The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries," WTO Director General Pascal Lamy said in the statement.

Poorer nations "are far more dependent on trade for growth" than industrialized countries, according to the WTO.

The WTO predicted the first decline in world production since the 1930s.

Since the worsening of the crisis in September, "real global output growth slowed to 1.7 per cent, compared to 3.5 per cent in 2007, and is likely to fall by between 1 and 2 per cent in 2009."

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

He sounded a warning against protectionism, which is on the rise.

"We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports," Lamy said.

"In London, G20 (Group of 20) leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure, which will render global recovery efforts less effective."

The WTO said that predicting trade levels is "unusually difficult" amid turbulent world markets and uncertainty about the course of the global economy, but there "has been little cause for optimism in the outlook for trade in 2009."

Monday in Geneva, IMF chief Dominique Strauss-Kahn called on governments to work together to fight unemployment but stressed that the real economy was dependant on the health of the financial sector.

"If we care about unemployment, we must renew the financial sector," said Strauss-Kahn, addressing the International Labour Organization. (dpa)