The head of the World Trade Organisation (WTO), Supachai Panitchpakdi, has called for new policies to lift confidence and encourage trade to grow.

His comments follow projections that the world goods trade could grow by 1% in 2002, after falling last year for the first time in almost 20 years.

But the WTO said the recovery depended on continuing the momentum started in the first half of 2002.

Mr Panitchpakdi said the time had come for "concrete proposals" from political leaders, in order to advance the current round of negotiations.

The Doha Development Agenda (DDA) talks began last November and are set to continue until January 2005.

A bad year

Mr Panitchpakdi said the DDA talks were an opportunity for political leaders to show "consumers, producers and markets that they intend to move forward in the area of further trade liberalisation".

In an uncertain and divided world, development of a common set of trade rules and principles for 21st century is vital

Supachai Panitchpakdi, Director-General WTO

His comments came as trade figures for 2001 showed the first decline in the volume of world merchandise trade since 1982 and the first fall in world merchandise output since 1991.

This is a stark contrast to figures for 2000, which showed the highest trade and output figures for more than a decade.

The WTO says the trade slump in 2001 was caused by numerous factors - falling economic activity in major developed markets, the bursting of the tech bubble, falling stock markets and September 11.

Recovery?

However, the WTO's report "World Trade Developments in 2001 and Prospects for 2002", found the first six months of 2002 had seen a strengthening in global activity.

The WTO suggested that if the "overall economic recovery" continued at the same rate, there was the chance of a 1% rise in trade volume.

Mr Panitchpakdi said while economic factors had contributed to last year's fall in trade, policy measures could now be taken to bolster confidence.

"In an uncertain and divided world, development of a common set of trade rules and principles for 21st century is vital," he said.

WTO accession in the short term has actually stimulated trade

Michael Finger, WTO

Europe lags behind

The WTO's report found that the recovery so far this year was "vigorous" in the US and East Asia.

However, Western Europe and Japan had experienced only a "timid" recovery and are likely to see continued sluggish growth, according to the report.

China, which joined the WTO in 2001, bucked the trend with exports rising 17.5% and imports by 14.5% in the first eight months of this year.

"WTO accession in the short term has actually stimulated trade," said Michael Finger from the WTO development and economic research division.