The Hindu Business Line : World trade may rise 7.5 pc: WTO economists

GOADED by higher than expected economic growth in Asia and the US, world trade recovered at an increased rate in 2003 and could expand further in 2004 if the global economy continues to improve, according to the World Trade Organisation (WTO).

Releasing its assessment of international trade in 2003 and prospects for the current year in Geneva on Monday, the world trade monitoring body said that a 2.5 per cent increase in global output in 2003 spurred world trade to recover by 4.5 per cent.

Even as this growth was stronger than expected a year ago after the outbreak of severe acute respiratory syndrome (SARS) and the build-up of tensions in West Asia, trade and output expansion in real terms in 2003 remained below the average rates logged since 1995, the WTO said.

WTO economists, however, maintain that with the global GDP growth expected to reach 3.7 per cent in 2004, world trade could expand by 7.5 per cent in 2004, albeit a host of risks associated with these projections abound — including the possibility of slower than expected import growth in the US and a faltering in demand recovery in Western Europe. Commodity price and exchange rate changes led to a 10.5 per cent strengthening of world merchandise trade prices in 2003.

WTO said for the first time since 1995, dollar prices increased for both agricultural and manufactured products. Prices of fuels — up by 16 per cent — were boosted by temporary supply shortfalls linked to the conflict in West Asia and civil unrest in Venezuela.

The WTO Director-General, Mr Supachai Pantichpakdi said, "Clearly, the improved economic situation in the US and Asia has given an important boost to world trade. But the pace of trade growth remains uneven and there remain many barriers to trade globally. Greater expansion of trade would provide support for sustained economic growth and job creation. If this potential is to be realised, the many trade distortions that exist must be addressed, and the best way to do is to bring about a successful conclusion to the Doha Development Agenda."

World merchandise exports rose 16 per cent to $7.3 trillion and commercial services exports by 12 per cent to $1.8 trillion in 2003. For both merchandise and services trade, this was the strongest annual increase in nominal terms since 1995.

Developing countries' merchandise exports expanded 17 per cent in 2003, slightly faster than their imports and the world average. The overall trade surplus widened for these countries. But according to estimates based on incomplete data, developing countries' commercial services exports and imports expanded at only half the rate of world service trade in 2003.

According to WTO, the average volume increase of world merchandise trade of 4.5 per cent in 2003 was somewhat faster than that in the preceding year. Import demand from Asia, North America and the transition economies contributed to the recovery of global trade.

The most dynamic trading regions in 2003 were Asia and the transition economies, notching up double-digit import and export expansion of their merchandise trade. US merchandise imports went up by 5.7 per cent while exports rose somewhat less than 3 per cent, after two years of contracting export volumes.

Ranking of countries on the basis of their foreign trade performance, WTO gives the top slot to Germany as the leading exporter with its exports amounting to $748.4 billion, accounting for 10 per cent of global exports, followed by the US at $724 billion, accounting for 9.7 per cent in 2003. Japan with 6.3 per cent in global exports earned $471.9 billion last year and occupied the third position among the trade majors. Out of 30 countries ranked as the top exporters, the UAE ranked the 30th slot as its exports amounted to $58.1 billion in 2003. India with its $55 billion exports last year did not figure in the top 30 exporters of the world.

On the import front, the US has emerged as the leading importer in the world accounting for 16.8 per cent of total imports at $1,305.6 billion in 2003, followed by Germany at $601.7 billion and accounting for 7.7 per cent of the global imports. Surprisingly, China has emerged as the third biggest importer in the world in 2003 as it accounted for 5.3 per cent of global imports at $412.8 billion.

India did, however, figure in the world's top 30 importers as holding the 24th slot. The country imported $69.7 billion of goods in 2003, accounting for a share of 0.9 per cent in global imports. Brazil, with imports at $50.7 billion and accounting for a share of 0.7 per cent in global imports, ranked as the 30th leading importer last year.