World trade growth declined sharply in 2007 and is expected to slow further this year as financial turmoil and rising commodity prices further depress global economic activity, the World Trade Organisation said on Thursday.

Preliminary estimates suggest the volume of world trade rose 5.5 per cent in 2007, down from a robust 8.5 per cent in 2006.

Based on the latest gloomy global output forecasts by the International Monetary Fund, the WTO says trade growth this year could slip to 4.5 per cent, the lowest since 2002.

But its economists say this forecast may prove optimistic, depending on the extent to which turbulence in financial markets, and action by governments to curb rising food and fuel prices, may damp world demand.

“As world trade responds strongly to variations in global economic activity, a stronger than projected deceleration in world economic growth could cut trade growth much more sharply, to ... less than 4.5 per cent,” the WTO said. “The turmoil in financial markets hasn’t as yet really fed through as much as it might into the real economy,” said Patrick Low, WTO chief economist.

“The impact has been quite limited so far.”

Mr Low cited figures for the first two months of the year showing dynamic import and export growth in the world’s three biggest traders: Germany, China and the US.

China overtook the US to become the world’s second largest goods exporter last year, with a jump in exports in dollar terms of more than a quarter. Germany kept top place.

The WTO said developing countries had markedly reduced their reliance on rich-country markets for exports in recent years. At 34 per cent, the share of poor countries in world trade reached a new peak in 2007, and they accounted for half total world trade growth.

Current forecasts suggested this trend, alongside high commodity prices, should enable the developing world to maintain faster output and trade growth than developed countries again this year, with imports rising more than 10 per cent.

But the WTO warned the sharp rise in food prices, and social unrest, could cloud that optimistic picture, even for countries that were net food exporters and in principle beneficiaries of those high prices.

Some trade figures were inflated by the steep fall in the dollar’s value.