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Caution: OECD report raises spectre of global recession

Trade growth stalled in almost every major economy in the autumn as the crisis in the euro zone hammered business confidence, raising the spectre of a worldwide downturn.

business Updated: Dec 01, 2011 23:04 IST

Trade growth stalled in almost every major economy in the autumn as the crisis in the euro zone hammered business confidence, raising the spectre of a worldwide downturn.

In its regular report on the state of the global marketplace, Paris-based thinktank the Organisation of Economic Co-operation and Development (OECD) said: "Trade growth slowed strongly in most major economies in the third quarter of 2011."

The industrialised G7 countries and the BRICS - Brazil, Russia, India and China - saw a 1% decline in imports in the third quarter of the year, compared to a 4.6% increase in the third quarter.

The widespread nature of the slowdown will alarm analysts, because it is reminiscent of autumn 2008, in the wake of the collapse of Lehman Brothers, when world trade plunged as confidence collapsed. Then, falling trade volumes -and sharp declines in measures such as the Baltic Dry Goods index, which tracks shipping costs - were the first warning signals that the global economy was on the brink of a deep recession.

The OECD said export growth in China slowed to 3.2% in the third quarter, from more than 10% three months earlier.

China's central bank loosened reserve requirements for its banks on Wednesday, in the first sign that it is starting to ease policy to cushion the economy against the impact of slowing demand from the US and Europe. Among the major economies, the OECD reports that only Japan saw a strong rise in trade, but that was partly a bounce-back from the decline earlier in the year as the industry recovered from the impact of the March earthquake and tsunami.