Zurich: Global trade has taken a sharp turn down, reinforcing the view that the world economy is in its worst state since the financial crisis a decade ago.

Figures show trade fell 1.8 per cent in the three months through January compared with the previous period. That’s the biggest drop since May 2009. On a year-on-year basis, trade posted its first decline in nine years in the three-month period.

The January World Trade Monitor by the Dutch Bureau for Economic Policy Analysis CPB includes an assumption of zero per cent import/export volume growth for the US as the shutdown means it doesn’t have data. On a month-on-month basis, global trade volumes were up 2.3 per cent, though the figure is erratic and it fell almost 4 per cent over November and December.

The underlying figures tally with a global growth tracker by Bloomberg Economics, which also shows a dramatic loss of speed. The index puts world growth at 2.1 per cent on a quarter-on-quarter annualised basis, down from about 4 per cent in the middle of last year.

Central banks have reacted to the slowdown by postponing tightening, but the question is whether things will stabilise or, if not, what policymakers can do if the situation worsens.

Chicago Federal Reserve President Charles Evans said Monday that right now the “risks from the downside scenarios loom larger than those from the upside ones.” The pessimistic view was echoed by IMF First Deputy Managing Director David Lipton, who said there are “growing risks and uncertainties,” including protectionism and US-China trade tensions.