Financial Daily from THE HINDU group of publications
Saturday, Oct 29, 2005
Industry & Economy
Slowdown in world trade growth likely, says WTO
New Delhi , Oct. 28
THE World Trade Organisation (WTO) foresees slowdown in world trade growth this year because of the lower economic output, brought on in part by the steep rise in crude oil prices.
World merchandise exports are likely to grow by 6.5 per cent in 2005, markedly less than the nine per cent growth logged in 2004.
In its annual publication International Trade Statistics, released in Geneva today, the world trade monitoring body said the dollar value of merchandise exports increased by 14 per cent in the first half of 2005.
This is a markedly lower expansion than in 2004, when the value of global merchandise exports rose by 21 per cent. The trade deceleration was particularly pronounced in Asia and in Europe.
Adjusted for price and exchange rate changes, trade of the major industrial economies stagnated in the first quarter of 2005 but picked up in the second quarter.
"It is unlikely that the momentum of rebound in the second quarter can be upheld in the second half of the year, given the poor short-term growth prospects for Europe and uncertainty linked to sharply higher and volatile oil prices," WTO said.
Increased import demand from the oil exporting regions will not be sufficient to offset weaker import growth in the US, Europe and East Asia.
Commenting on the performance and prospects, the WTO Director-General, Mr Pascal Lamy, said, "While growth in trade will remain satisfactory in 2005, the decelerating trend is cause for some concern. To set us on the right course, we need to create more opportunities for trade, particularly in developing countries and we need to adjust global trade rules to meet the needs of entrepreneurs in the 21st century in a better manner. The way to achieve this is through the successful conclusion of the Doha Development Agenda round of global trade negotiations".
The report said world merchandise exports increased in nominal terms by 21 per cent to $8.9 trillion. In real terms, merchandise exports rose by nine per cent in 2004 compared with nearly five per cent in 2003. Trade in commercial services grew in nominal terms by 18 per cent to $2.1 trillion in 2004, which was stronger than the 14 per cent growth logged in the preceding year.
Between 2000 and 2004, both global merchandise and commercial services exports rose at an average annual rate of about nine per cent.
A noteworthy feature in 2004, WTO said, was that the two most populous countries in the world China and India recorded outstanding economic growth (9.5 per cent and 7.3 per cent respectively) and trade expansion for the second year in a row.
WTO said that after the incredible spurt in oil prices, another significant feature of global trade in 2004 was the continuing emergence of China as a major market for and supplier of goods and services. The sustained and dynamic growth of China's exports and imports over recent years ranked it third among the leading traders in 2004. For many commodities, China has become the largest importer and for a number of manufactured goods, the largest supplier.
WTO said largely due to higher prices, the value of world exports of iron and steel, ores and minerals, non-ferrous metals and fuels increased between 30 and 45 per cent in 2004.
This recent surge in value contrasted with the long-term decline of the shares of these product categories in world trade. A new and more detailed product breakdown made in the report highlights the strength of exports of scientific and controlling instruments which rose by 27 per cent to $188 billion, nearly matching world exports of textiles.
Global exports of agricultural products expanded by 15 per cent to $783 billion in 2004.
Other sectors that registered export growth include iron and steel $266 billion, non-ferrous metals $172 billion, fuels $993 billion, other machinery $1,134 billion, pharmaceuticals $247 billion, office and telecom equipment $1,134 billion, other semi-manufactures $633 billion, automotive products $847 billion, textiles $195 billion and clothing $258 billion.
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