Financial Daily from THE HINDU group of publications
Friday, Apr 15, 2005
Industry & Economy
`World trade growth to slow down this year'
New Delhi , April 14
THE international merchandise trade growth is projected to decelerate from 9 per cent in 2004 to 6.5 per cent this year in the wake of a marked slow-down in overall world economic growth that began in the second half of 2004.
Releasing its preliminary assessment of global trade prospects and review of the performance in 2004 at Geneva, the global trade monitoring body said the developing countries rode on a wave of higher oil and commodity prices and vigorous global trade growth including recovery in trade in office and telecom equipment.
Emphasising the importance of liberalisation of trade in goods and services, the Director-General of the WTO, Mr Supachai Panitchpakdi, said: "It is through trade that countries can chart a path towards sustainable development and a higher standard of living. While the trend is encouraging, trade expansion is still hampered by barriers, which must be brought down. The best way to reduce these barriers and to ensure more equitable trading rules for all nations is to complete the Doha Development Agenda round of trade negotiations".
The WTO said in 2004, the value of world merchandise trade rose 21 per cent to $8.88 trillion and that of world commercial services trade by 16 per cent to $2.10 trillion. For both merchandise and commercial services trade this signified an acceleration of growth for the third year in a row and the strongest rise since 2000.
A particular feature of nominal trade growth last year, the WTO said, was that one major merchandise product - fuels - and one major services category - transportation - logged an exceptionally robust performance. These two sectors have lagged well behind overall trade growth during the last two decades. The rebound in global tourism, particularly pronounced in Asia, led to a marked spurt in global travel receipts.
Higher oil prices improved the terms of trade of developing countries as a group and specifically those of the developing regions of the Middle East, Africa and Latin America. Strong commodity prices and the recovery in the trade of office and telecom equipment led to a sharp spurt in the merchandise exports from developing countries as their share in world merchandise exports was 31 per cent in 2004 - the highest level since 1950.
Higher oil prices and metal prices sharply increased the share of fuels, metals and iron and steel in world merchandise exports to a new cyclical peak. Nominal merchandise trade growth (21 per cent) was the highest in 25 years due to a combination of strong real trade growth (9 per cent) and a sharp increase in dollar prices (11 per cent).
WTO said the Asian region recorded the highest volume of real merchandise export growth in 2004 at 14.5 per cent. China, the Republic of Korea and Singapore notched up rates in excess of 20 per cent, while Japan's real merchandise exports rose by 11 per cent.
Asia's merchandise import growth too rose 14.5 per cent in 2004, acceleration in comparison to the preceding year.
WTO said the strength of developing Asia's merchandise exports could be attributed partly to recovery in electronic goods sector. Global shipments of digital cameras, mobile phones, semiconductors and personal computers expanded at double-digit rates. For five Asian economies, office and telecom equipment accounted for between one-third and two-thirds of their exports in 2004 and played a key part in their export boom.
On a country level, a large number of countries which export primarily fuels and other mining products recorded export increases between one third and about one half, for instance, Chile (52 per cent), Kazakhstan (54 per cent), Nigeria (57 per cent).
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