Service on WTO and Trade Issues (Nov08/08)
trade growth slowed down last year
Geneva, 6 Nov (Kanaga Raja) -- Growth in world merchandise trade slipped to 6% in real terms in 2007, as a result of weakening demand in developed economies, realignments in exchange rates and fluctuations in the prices for commodities such as oil and gas, the World Trade Organization (WTO) said Wednesday.
In its "International
Trade Statistics 2008", the WTO said that the slowdown of trade
growth from 8.5% in 2006 to 6% in 2007 was due to a deceleration of
import demand, mainly in the
The WTO said that the 6% trade growth is slightly higher than the preliminary assessment of 5.5% announced in April but still a considerable decline from the 2006 figure.
The report said
that trade remained strong in most developing countries. Regions such
as Africa, the Middle East, the Commonwealth of Independent States (CIS),
developing Asia, and South and
While higher commodity prices helped to improve the financial situation of certain countries, higher energy and food prices also increased inflationary pressures worldwide.
For the 2000-2007 period, exports on average increased by 2.7 percentage points faster than real gross domestic product. The only exception was in 2001, when trade marginally declined due to the dot. com bubble burst.
The report said that exports of manufactured products expanded by 7.5% in volume terms in 2007, maintaining its lead over both agriculture and fuels and mining products, which grew by 5% and 3% respectively. The deceleration in trade in manufactured products from the 10% level achieved in 2006 is partly due to the slowdown of activity in major importing economies.
Asian exports of manufactured products expanded by 13.5% in 2007, but North American and European exports increased by only 4.5% and 4% respectively, almost half their 2006 rates.
Spurred by a 14%
growth in prices, agricultural exports expanded by 19.5% in dollar terms
in 2007, the highest growth rate since 2000.
The report said
that exports from
With an estimated
7% increase in average prices in 2007 and continuous expansion in volumes
traded, the value of world exports of manufactured products rose by
The report observed that trade flows within regions account for a higher share of world trade than flows between regions. Since 2000, this share has fluctuated from between 55% to 58%. Relatively large differences have occurred in the growth of trade within regions: North America and Asia show a relative balanced growth between inter- and intra-regional trade; Europe's intra-trade is growing much faster than its external trade due to the deepening of its economic integration while South and Central America, Africa, the Middle East and the CIS have recorded higher growth in inter-regional exports than in intra-regional.
The European Union is a highly integrated marketplace, with two-thirds of its trade transactions taking place within the region.
In 2007, intra-trade accounted for slightly more than half (51%) of the exports of the North American Free Trade Agreement (NAFTA). In 2000, this share was 56%. However, as trade with countries outside NAFTA's area has been growing at a somewhat faster pace than intra-NAFTA trade, this share has been declining.
Other trade blocs, such as MERCOSUR, the Andean Community or ASEAN, show a less pronounced integration. MERCOSUR countries carry out only around 14% of their trade with other countries in the agreement, the Andean Community only 8%, and ASEAN a quarter.
According to the
The share of
The participation of Least-Developed Countries (LDCs) in world trade has been increasing over the past five years, albeit slowly, said the report. In 2006, the ratio of trade to GDP in LDCs continued to grow. For merchandise, LDCs' share in world trade grew to 1% due to the higher international prices of commodities. Their share of trade in commercial services amounted to 0.4% only. However, trade in commercial services is increasing in all major sectors, such as transportation, travel and other commercial services. Transportation services showed steady growth between 2000 and 2006, resulting in an average annual increase of 14%.
The report noted that in 2007, the value of trade in commercial services increased at a faster rate (18%) than trade in goods (15%) for the first time in five years. This was mainly due to the expanding international supply of many services and to the increase in transportation prices. While the services sector generates approximately two-thirds of the total world value added, its share in total trade remains below 19%.
In 2007, the major
exporters of commercial services remained the European Union, the
Prices of agricultural products increased by 14% in 2007, compared with 7% for manufactured goods and 11% for fuels and mining products. This price rise helped to boost the value of agricultural exports, which rose by 19%, exceeding the performance of both manufactured goods and fuels and mining products, said the report.
Sharply rising prices of cereals and vegetable oils contributed to the 21% expansion of food exports. This price hike was due partly to strong demand on the part of developing and emerging economies and to a new demand for bio-fuels. The increased cost of fertilizers also contributed to the higher food prices, with prices for the most common fertilizers rising between 39% and 68% in 2007.
Net food exporters
benefitted from the rise in prices, which tended to raise their export
revenues. In 2007,
Some 12% of
World exports of fuels and mining products increased by 15% in 2007, significantly below the 28% recorded in 2006. This is mainly due to the lower growth in fuel prices, 11%, compared with 41% in 2005 and 21% in 2006. This is the first time since 2003 that world exports of fuels increased at a slower pace than that for other major product groups.
In 2007, world exports of manufactured goods were valued at $9.5 trillion, 15% higher than in 2006 and in line with the expansion of total merchandise exports. The share of manufactured goods in total merchandise exports was 70%; since 2000, however, this share has dropped by 5 points, said the report.