WTO Annual Report Predicts Slower Trade Growth in 2001

 
On May 23, the WTO published a summary of its annual report on world trade in 2000. According to its findings, global trade and output growth in 2000 were the strongest in more than a decade, with all regions benefiting from the stronger world economy.

Merchandise trade expansion in real terms in 2000 matched the best annual rates observed over the last five decades. However, a deceleration of economic growth began in the final quarter of 2000, clouding the trade prospects for 2001.

The 151-page report includes an overview of developments in the international trading environment and a summary of WTO activities. The introduction highlights the launching of the negotiations on agriculture and services, the assistance provided to least developed countries and various issues arising out of the Seattle Ministerial. It also includes an account of the activities of the various WTO bodies and committees.

The preliminary review of world trade developments in Chapter II of the report found that while all regions reported faster nominal trade growth in 2000, exports and imports of developing countries expanded by more than 20%, lifting their share in world merchandise trade to the highest level in the last 50 years. Various factors contributed to this outcome, including the economic recovery in Latin America and East Asia, the sharp rise of oil prices and stronger import demand in developed countries.

The value of world merchandise trade rose by 12.5% in 2000-twice the average for the last decade-to reach nearly $6.2 trillion. World commercial services trade is estimated to have expanded by 5% (to $1.4 trillion) in 2000, the fastest annual growth since 1997. For the second year in a row, the value of commercial services trade expanded less rapidly than merchandise trade, but for the 1990-2000 period its 6% annual growth matched that of merchandise trade.

The report concluded that the world economy is now retreating from the high growth seen last year, dimming the prospects for world trade in 2001. The volume of world merchandise trade is expected to grow by 7%, a marked reduction from the 12% estimated in 2000.

The following are other highlights of the WTO's review of world trade developments:

• The year 2000 witnessed not only outstandingly high global trade and output growth (12% and 4%, respectively), but also an exceptionally large excess of trade growth over output growth.
   

• Prices of all internationally traded goods remained almost unchanged from the preceding year as sharply higher prices for fuel were offset by declines in the prices of manufactured goods. Prices of manufactures recorded their fifth consecutive annual decline in 2000, causing average prices to fall to their lowest level in 10 years.
   

• Real oil prices reached their highest level since 1985 and the share of fuels in world merchandise trade is estimated to have recovered to somewhat more than 10%, close to its share in 1990.
   

• The regions with a large share of fuels in their merchandise exports (the Middle East, Africa and the transition economies) recorded outstanding export growth-between 25% and 50% in 2000.
   

• Asia's merchandise import growth was the strongest of all the regions (23.5%) and exceeded its export growth for the second year in a row.
   

• North America's merchandise import growth (18%) was second only to that of Asia and again stronger than its export expansion (13.5%).
   

• The growth in the dollar value of Western Europe's merchandise exports and imports was by far the lowest of all regions, largely due to the further depreciation of the euro and other European currencies vis-�-vis the dollar.
   

• North America and Latin America recorded double digit export and import growth for commercial services.
   

• Asian exports of commercial services rose by 13%, boosted by the marked acceleration of services export growth of Asia's three leading exporters: Japan, Hong Kong and China. The near stagnation of Japan's services imports-which account for one-third of the Asian regional total-was the principal factor in the subdued expansion of Asia's commercial services.
    

• Expressed in euros, Western Europe's commercial services trade expanded by about 14%, an acceleration in both nominal and real terms. In dollar terms, however, Western Europe's commercial exports and imports decreased slightly.
   

• The sharp oil price variations, which recorded their highest and lowest levels in 15 years, have left their mark on international trade flows. The share of fuels in world merchandise exports fell to 6.5% in 1998, the lowest share in three decades, but recovered to 10.5% in 2000.
    

• The swings in oil prices have had a dramatic impact on the export earnings of oil exporters. At least 18 fuel exporters recorded total merchandise export growth in excess of 50% in 2000. Fuel accounts for more than one-third of the merchandise exports of about 30 countries. While the developing countries (and LDCs) are, as a group, net fuel exporters, the majority of the developing countries are net importers.
   

• Asia replaced Western Europe as the largest net fuel importing region in the second half of the 1990s. This development can be attributed to the buoyant rise of fuel imports into the fast growing Asian economies. The Middle East consolidated its position as the world's leading fuel exporter.