With a government report showing that the U.S. trade deficit has narrowed, economists are fretting the deterioration of global trade, MarketWatch reported.

The deficit stood at $36 billion in January on an across-the-board decline in demand for imported goods, the U.S. Commerce Department said today. In January 2008, the trade deficit was $59.2 billion.

“The numbers have been wild since the summer of last year … when a combination of falling demand – and we surmise – much tighter trade credit, began to squeeze both exports and imports,” said Ian Shepherdson, chief economist at High Frequency Economics, as reported by MarketWatch.

In part because of the fall-off in trade, the World Bank now predicts that global gross domestic product will contract in 2009, the worst performance since the Great Depression.

This is the sixth straight monthly drop in the U.S. trade gap, the longest string since the latest data series was started in 1992.

Exports fell 5.7 percent in January to $124.9 billion, the lowest level since September 2006. Meanwhile, imports fell 6.7 percent to $160.9 billion.

Despite the reduction in the trade deficit, the gap with China, unadjusted for seasonal factors, was essentially unchanged at $20.57 billion in January, compared with $20.31 billion in the same month last year.

Exports to China fell to $4.2 billion, the lowest level since February 2006.

The U.S. Labor Department reported today that import prices dropped 0.2 percent in February and 12.8 percent in the last year. Last month’s decline was smaller than expected, mostly due to the first increase in petroleum prices in seven months.

Capitol goods prices dropped 0.4 percent and industrial supply prices fell 2 percent, according to the report.