World economic crisis/G8

Worst is yet to come in economic crisis, says WTO chief Lamy

Article published on the 2009-07-07 Latest update 2009-07-07 14:25 TU

Union members in California protest after the US state declared a fiscal emergency over its budget deficit
(Photo: Reuters)

The worst social and political efffects of the world economic crisis are yet to come, World Trade Organisation (WTO) chief Pascal Lamy warned today ahead of G8 summit which starts in Italy Wednesday.

"The worst of the crisis in social terms is still to come, which means that the worst of the crisis in political terms is still to come," Lamy told reporters in Switzerland Tuesday.

He went on to urge leaders of the G8 group of rich nations to work for more trade liberalisation at their meeting this week. Host nation Italy has been criticised for failing to give direction to the meeting, which is to be held in the town of Aquila in solidarity with victims of the earthquake there earlier this year.

The WTO has revised its forecasts for the world economy in 2009 downwards, predicting that world trade will plunge ten per cent to its lowest level since World War II.

Lamy warned that a slowdown in trade will be particularly tough on developing economies, which the WTO expects to contract seven per cent this year, more than double the two or three per cent initial estimate.

World Bank President Robert Zoellick on Monday warned that protectionism is in danger of getting out of control in certain countries and warned that they are "playing with fire".