Danger to world trade seen by tariff group
World trade is showing increasingly dangerous parallels to the 1930s, with the international banking system under threat and protectionism on the rise, the General Agreement on Tariffs and Trade said.
A bank lending boom in the 1970s, similar to what preceded the Great Depression, has left many countries and companies overindebted, it said in a report reviewing the past 18 months. Simultaneously, protectionism has proceeded apace as governments try to maintain industries under severe pressure from high inflation, interest rates, and energy prices and low-cost foreign competition. The report said the two, combined, could lead to deflation - a collapse in prices such as that which struck the world economy in the 1930s.