World trade growth decelerated sharply in 2011 as the global economy struggled under the influence of natural disasters, financial uncertainty and civil conflict. A slowdown in trade had been expected after the strong rebound of 2010 but the earthquake in Japan and flooding in Thailand shook global supply chains, and fears of sovereign default in the euro area weighed heavily in the closing months of the year. The civil war in Libya also reduced oil supplies and contributed to sharply higher prices. All of these factors combined to produce below average growth in trade in 2011. I. World trade in 2011
Transcript
World TrAde reporT 2012
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World trade growth decelerated sharply in 2011 as the global economy struggled under the influence of natural disasters, financial uncertainty and civil conflict. A slowdown in trade had been expected after the strong rebound of 2010 but the earthquake in Japan and flooding in Thailand shook global supply chains, and fears of sovereign default in the euro area weighed heavily in the closing months of the year. The civil war in Libya also reduced oil supplies and contributed to sharply higher prices. All of these factors combined to produce below average growth in trade in 2011.
I. World trade in 2011
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A. IN
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Contents A Introduction 18
B Stateoftheworldeconomyandtradein2011 20
C Appendixfiguresandtables 26
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A. IntroductionThevolumeofworldmerchandisetraderose5.0percentin 2011, accompanied by global output growth of2.4 per cent. This marked a significant slowdown from2010, when trade advanced 13.8 per cent and outputexpandedby3.8percent(seeFigure1.1).1
Slower growth in both trade and output had beenanticipated for 2011, but multiple economic shocksheldbackeconomicactivityandtradeduringtheyear.Theearthquake, tsunamiandnuclear incident thathitJapan in March sharply depressed the country'sexports in the second quarter, while flooding inThailand reduced the supply of key parts andcomponentsinthefourthquarterandfurtherdistortedglobal production networks. Turmoil in North Africancountriestookatollontheregion'sexports,especiallyin Libya, where oil production and exports plunged.Finally,negativegrossdomesticproduct(GDP)growthin theEuropeanUnion reduceddemand for importedgoodsinthefourthquarterastheeurosovereigndebtcrisiscametoahead.
Thesluggishpaceofeconomicgrowthin2011reducedimportdemandinthelargesteconomiesandresultedinglobal export growth below the WTO's forecast of5.8 per cent. Japan's output contracted in the fourthquarterafterrecordingjustone-quarterofexpansiononthe year in the third quarter. Even China’s dynamiceconomyappearedtobeslowingtowardstheendoftheyear as its fourth quarter GDP growth slipped to anannualized rateof7.8percentafteraveragingaround9.5percentover thefirst threequarters,according todata from China’s National Bureau of Statistics.Economic indicators improved in the United States inthe closing months of 2011 as output growthaccelerated to 3.0 per cent annualized in the fourth
quarter and unemployment fell to 8.3 per cent inDecember according to data from the OECD, but thisonlypartlymadeupforearliersetbacks.
Developed economies exceeded expectations withexportgrowthof4.7percentin2011whiledevelopingeconomies (for the purposes of the analysis, thisincludestheCommonwealthofIndependentStates,orCIS)didworsethanexpected,recordinganincreaseofjust 5.4 per cent. In fact, shipments from developingeconomiesother thanChinagrewataslightlyslowerpace than exports from developed economies(includingdisaster-struckJapan).Therelativelystrongperformance of developed economies was driven bya robust 7.2 per cent increase in exports from theUnitedStates,aswellasa5.0percentexpansion inexportsfromtheEuropeanUnion.Meanwhile,Japan's0.5 per cent drop in exports detracted from theaveragefordevelopedeconomiesoverall.
Several adverse developments disproportionatelyaffected developing economies, including theinterruption of oil supplies from Libya that causedAfricanexportstotumble8percent in2011,andtheseverefloodingthathitThailand inthefourthquarter.TheJapaneseearthquakeandtsunamialsodisruptedglobal supply chains, which penalized exports fromdeveloping countries such as China, as reducedshipments of components hindered production ofgoods forexport (seequarterly volumedevelopmentsforselectedeconomiesinAppendixFigure1).
Significantexchangeratefluctuationsoccurredduring2011,whichshiftedthecompetitivepositionsofsomemajor traders and prompted policy responses (e.g. inSwitzerland and Brazil). Fluctuations were driven in
Figure1.1: Growth in volume of world merchandise trade and GDP, 2000-11 (annualpercentagechange)
largepartbyattitudestowardsriskrelatedtotheeurosovereign debt crisis. The value of the US dollar fell4.6percent innominal termsagainstabroadbasketof currencies according to data from the FederalReserve, and 4.9 per cent in real terms according todata from the International Monetary Fund, makingUSgoodsgenerallylessexpensiveforexport.NominalUS dollar depreciation also would have inflated thedollarvaluesofsomeinternationaltransactions.
Thedevelopmentsoutlinedaboverefertotradeinreal(i.e. volume) terms, but nominal flows (i.e. in currencyterms)forbothmerchandiseandcommercialservicesweresimilarlyaffectedbyrecenteconomicshocks.
In 2011, the dollar value of world merchandise tradeadvanced 19 per cent to US$ 18.2 trillion, surpassingthepreviouspeakofUS$16.1trillionin2008.Muchofthe growth was due to higher commodity prices, butmonthlytradeflowsweremostlyflatordeclininginmanymajor tradersover thecourseof theyear (seemonthlynominaldevelopmentsinAppendixFigure2).
The value of world commercial services exportsincreased by 11 per cent in 2011 to US$ 4.2 trillion,with strong differences in annual growth rates for
particularcountriesandregions.AfricanexportswerehithardbytheturmoilinArabcountries,recordingzerogrowth as Egypt’s exports of travel services plungedmore than 30 per cent. Quarterly data on servicesjointly prepared by the WTO and the United NationsConference on Trade and Development (UNCTAD)also showed a sharp slowdown in the fourth quarter,coincidingwiththeheightenedleveloffinancialmarketturmoilsurroundingtheeurodebtcrisis.
The5.0percentgrowthofworldmerchandisetradein2011wasbelowthepre-crisisaverageof6.0percentfor 1990–2008, and was even below the average ofthe last 20 years, including the period of the tradecollapse (5.4 per cent). As a result, trade volume ofworld trade was even further away from its pre-crisistrendat theendof2011than itwasayearearlier. Infact, this gap should continue to increase as long astherateoftradeexpansionfallsshortofearlier levels(seeFigure1.2).
Eliminating this divergence would require faster thanaverage growth at some point in the future.Conceivably, this could happen after governments,businesses and households in developed countriesreducetheirdebtburdenstomoremanageablelevels,butthisprocessofdeleveraging(reducingrelianceondebt) and fiscal consolidation (reducing budgetdeficits) is likely to take years. In the meantime, theworld may have to resign itself to a long period ofslower-than-averagegrowthininternationaltrade.
Figure1.2: Volume of world merchandise exports, 1990-2011 (indices,1990=100)
Therateofworldoutputgrowthfellto2.4percentin2011from3.8percent in thepreviousyear,weigheddownbytheon-goingsovereigndebtcrisisinEurope,supply chain disruptions from natural disasters inJapanandThailand,andturmoilinArabcountries.Thispace of expansion was well below the 3.2 per centaverageover the20years leadingup to thefinancialcrisisin2008(seeTable1.1).
Japan’s0.5percentcontractioninoutput,broughtonby the catastrophic earthquake in March 2011,contributed to the lacklustre 1.5 per cent growth ofdeveloped economies in 2011. Growth of GDP (totalproduction in the country) in the United States wasslightly faster than the average of all developedeconomiesat1.7percent,while theEU’sratewas inlinewiththeaverageat1.5percent.
The fastest growing regions were the Middle East at4.9 per cent, followed by the Commonwealth ofIndependent States at 4.6 per cent and South andCentral America at 4.5 per cent. Africa, with GDPgrowthof2.3percent,mighthavegrownevenfasterif
not for the uprisings that occurred in Libya, Tunisia,Egyptandelsewhere.
Onceagain,China’sGDPgrowthoutpaced the restofthe world at 9.2 per cent, but this rate was no betterthanwhatthecountryachievedatthepeakoftheglobalfinancialcrisisin2009.Incontrasttothisperformance,the newly industrialized economies of Hong Kong,China, of the Republic of Korea, of Singapore and ofChineseTaipeitogethergrewatlessthanhalftherateofChina(4.2percent).DevelopingeconomiesandtheCIStogetherrecordeda5.7percentincreasein2011.
AggregatequarterlyfiguresforworldGDPgrowtharenot readily available, but such growth likely slowedtowardstheendof2011inthefaceofheadwindsfromtheEuropeansovereigndebtcrisis.Outputoftheeuroarea contracted at a 1.3 per cent annual rate in thefourth quarter, marking the first quarter of negativegrowth since the currency bloc emerged fromrecessionin2009(seeFigure1.3).Atthesametime,China’seconomyslowedandJapanremainedmiredinrecession. Growth picked up in the United States inthe fourth quarter as unemployment eased, but thiswaslikelyoutweighedbydevelopmentselsewhere.
B. State of the world economy and trade in 2011
Table1.1: GDP and merchandise trade by region, 2009-11 (annualpercentagechange)
GDP Exports Imports
2009 2010 2011 2009 2010 2011 2009 2010 2011
World -2.6 3.8 2.4 -12.0 13.8 5.0 -12.9 13.7 4.9
North America -3.6 3.2 1.9 -14.8 14.9 6.2 -16.6 15.7 4.7
Worldmerchandisetradevolumegrew5.0percentin2011,andAsia’s6.6percent increase ledall regions(see Table 1.1). One of the more significantdevelopmentsin2011wasthe8.3percentcontractioninthevolumeofAfrica’sexports.ThiswaslargelyduetothecivilwarinLibya,whichreducedthecountry’soilshipments by an estimated 75 per cent. Japan’sexports also fell by the same 0.5 per cent as thecountry’sGDP,whileshipmentsfromtheCISadvancedjust1.8percent.
Although Africa recorded a respectable 5.0 per centincrease in imports, other resource-exporting regions
performedbetter. ImportsoftheCISgrewfasterthanthoseofanyotherregionat16.7percent,followedbySouth and Central America’s at 10.4 per cent.Meanwhile,Japan’s importgrowthwastheslowestofanymajoreconomyorregionin2011at1.9percent.
India had the fastest export growth among majortraders in 2011, with shipments rising 16.1 per cent.Meanwhile, China had the second-fastest exportgrowthofanymajoreconomyat9.3percent.
Thecombinationoflowexportvolumegrowthandhighimport volume growth seen in the Commonwealth ofIndependent States in 2011 can be attributed to the32 per cent rise in energy prices for the year, whichboosted export earnings and allowed more foreigngoodstobeimported(seeTable1.2).
Figure1.3: Real GDP growth and trade of euro area economies, 2008-11 (annualizedpercentagechangeoverpreviousquarter)
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Table1.2:World prices of selected primary products, 2000-11 (annualpercentagechangeandUS$perbarrel)
Appendix Figure 1 shows seasonally adjustedquarterly merchandise trade volumes for selectedeconomies, revealing some of the dynamics ofchanges that occurred in 2011. The decline in extra-EU imports (i.e. imports from outside the EuropeanUnion) measured -3.8 per cent in the fourth quarter,equivalentto14.4percentatanannualizedrate.Sucharateofdeclineisunlikelytogoonforverylong,butithelps to explain the weakness of exports of othereconomies at the time. Imports of the United Stateswereflat rather than fallingduring2011,butboth theUnited States and the European Union saw theirexportsriseoverthecourseoftheyear.
The other major development was the slump inChinese importsthatoccurredaroundthetimeof theJapanese earthquake in the second quarter of 2011.Betweenthefirstandsecondquarters,China’simportsdropped 6.1 per cent, equivalent to 27 per centannually, but in subsequent quarters trade rose4.2percent(18percentannualized)and7.3percent(32 per cent annualized). This is consistent with astrongbutrelativelyshort-liveddirect impactfromthedisaster, although other indirect influences might bejust as important. It also demonstrated the stronginsertionofChinainAsianvaluechains.
Although not shown in the charts, the volume ofThailand’sexportsplunged8.5per cent in the fourthquarter due to flooding that significantly affectedexports of intermediate goods, further disturbingglobalproductionnetworks.
The total dollar value of world merchandise exportsjumped 19 per cent to US$ 18.2 trillion in 2011(seeTable1.3).1This increasewasnearlyas largeasthe 22 per cent rise in 2010 and was driven in largepartbyhigherprimarycommodityprices.
Commercialservicesexportsalsogrew11percentin2011 to US$ 4.1 trillion. The share of commercialservicesintotalgoodspluscommercialservicestrade(on a balance of payments basis) was 18.6 per cent,thesmallestsuchsharesince1990.
Transportservicesrecordedtheslowestgrowthofanysub-category of services (8 per cent), followed byother commercial services (11 per cent) and travel(12percent).
The slowgrowthof transport services is perhapsnotsurprisingconsidering theclose relationshipbetweenthis category of services and trade in goods, whichstagnatedinthesecondhalfof2011.Anoversupplyofnew container ships may have also depressedrevenuesintheshippingsector.
Appendixtables1to6providedetailedinformationonnominal merchandise and commercial services tradeflowsbyregionandforselectedeconomies.Theyalsoincludetablesofleadingexportersandimporterswithand without intra-EU trade (i.e. trade betweenEU members). Some noteworthy developments formerchandise trade and commercial services aresummarizedbelow.
(a) Merchandisetrade
The dollar value of North America’s merchandiseexports rose 16 per cent in 2011 to US$ 2.28 trillion(equalto12.8percentoftheworldtotal),whileimportsgrew 15 per cent to US$ 3.09 trillion (17.2 per cent)(seeAppendixTable1).
South and Central America’s exports advanced27 per cent to US$ 749 billion (4.2 per cent of theworld total), buoyed by stronger primary commodityprices.Atthesametime,theregion’simportsincreasedby24percenttoUS$727billion(4.0percent).
Europe’s nominal exports grew 17 per cent toUS$ 6.60 trillion, or 37.1 per cent of the world total.The region’s imports were also up 17 per cent toUS$6.85trillion(38.1percent).
Table1.3: World exports of merchandise and commercial services, 2005-11 (US$billionandannualpercentagechange)
Exportsof theCommonwealthof IndependentStatesjumped34percent toUS$788billion,supportedbyrising energy prices. Imports also increased by30percenttoUS$540billion.SharesofCISexportsand imports in world trade were 4.4 per cent and3.0percent,respectively.
Africa’sexportswereup17percenttoUS$597billion(3.4 per cent of the world total) while imports rose18percenttoUS$555billion(3.1percent).
ExportsfromtheMiddleEastsurged37percentindollarterms toUS$1.23 trillion (or6.9per centof theworldtotal) as a result of rising oil prices. In contrast to this,importsonlyincreasedby16percenttoUS$6.65billion(3.7percent).
Finally,Asia’sexportswereup18percent in2011toUS$5.53trillion(31.1percentoftheworldtotal)whileimports advanced 23 per cent to US$ 5.57 trillion(30.9percent).
Thetopfivemerchandiseexportersin2011wereChina(US$1.90trillion,or10.4percentofworldexports),theUnitedStates(US$1.48trillion,8.1percent),Germany(US$1.47trillion,8.1percent),Japan(US$823billion,4.5 per cent) and the Netherlands (US$ 660 billion,3.6 per cent). The leading importers were the UnitedStates(US$2.27trillion,12.3percentofworldimports),China (US$ 1.74 trillion, 9.5 per cent), Germany(US$1.25trillion,6.8percent),Japan(US$854billion,4.6percent)andFrance(US$715billion,4percent)(seeAppendixTable3).
If we ignore trade between European Union membercountries and treat the EU as a single entity, the topexportersweretheEuropeanUnion(US$2.13trillion,or14.9percentof theworld total),China (13.3percent),the United States (10.3 per cent), Japan (5.7 per cent)and the Republic of Korea (US$ 555 billion, or3.9 per cent). The leading importers, excluding tradebetween EU countries, were the European Union(US$2.34trillionor16.2percentofworldimports),theUnited States (15.6 per cent), China (12.0 per cent),Japan (5.9 per cent) and the Republic of Korea(US$425billion,or3.6percent)(seeAppendixTable4).
There were few significant moves up or down in theworld rankings in 2011. The Russian Federation wentfrombeingthe12thlargestexporterofmerchandisein2010tobeingtheninthin2011(includingEUmembers).
(b) Commercialservicestrade
The region with the fastest growth in commercialservicesexportsin2011wastheCIS,with20percentgrowthinthedollarvalueofitsexports.Africahadtheslowestexportgrowthofanyregionatzeropercent.Allother regions recorded double-digit growth between10and14percent.TheslowgrowthofAfricanexportswaslargelyduetotheturmoilinNorthAfricancountries.
Egypt and Tunisia were especially hard hit as theircommercial services exports fell 20 per cent and19 per cent, respectively. However, Sub-SaharanAfrica'sexportsincreasedinlinewiththeworldaverageof11percent(seeAppendixTable2).
Meanwhile, African services imports rose 9 per cent,slightly lessthantheworldaverageof10percent. Incontrast to exports, there was not as much of adivergencebetweenNorthernAfricaandSub-SaharanAfricaon the import side,as the formergrew7.0percent and the latter 9.5 per cent. The region with thefastest growth in services imports was the CIS at21 per cent, followed closely by South and CentralAmericaat18percent.Otherregionsrecordedgrowthratesforcommercialservices importsbetween8and14percent.
The top five exporters of commercial services in 2011weretheUnitedStates(US$578billion,or14percentoftheworldtotal),theUnitedKingdom(US$274billion,7percent),Germany(US$253billion,6percent),China(US$182billion,4percent)andFrance(US$161billion,4percent).TheUnitedKingdom replacedGermanyastheworld’ssecond-largestexporterofservicescomparedwithlastyear'stables,butthiswasmainlyduetoalargeupward revision in official statistics on UK exports ofother business services and financial services, whichtogether make up roughly half of all UK commercialservicesexports(seeAppendixTable5).
ThetopfiveimportersofcommercialservicesweretheUnitedStates (US$391billion,or10percentof theworld total), Germany (US$ 284 billion, 7 per cent),China (US$ 236 billion, 6.1 per cent), the UnitedKingdom (US$ 171 billion, 4 per cent) and Japan(US$165billion,4.3percent).Therewerenochangesintherankingofthetopimporters.
Theabovefiguresincludeintra-EUcommercialservicestrade, i.e. services trade between European Unionmember countries. If this trade is excluded from theworld total and the European Union is treated as asingle entity, the EU becomes the top exporter ofcommercialservices(US$789billion,24.8percentoftheworldtotal),followedbytheUnitedStates(US$578billion,18.2percent ),China(US$182billion,5.7percent), India (US$ 148 billion, 4.7 per cent) and Japan(US$ 143 billion, 4.5 per cent). The European Unionalso becomes the leading importer (US$ 639 billion,21.1percentoftheworldtotal),followedbytheUnitedStates(US$391billion,12.9percent),China(US$236billion, 7.8 per cent), Japan (US$ 165 billion, 5.4 percent) and India (US$ 130 billion, 4.3 per cent) (seeAppendixTable6).
4. Sectoraldevelopments
Pricesfortradedmanufacturedgoodshavetendedtobe more stable than those of primary products, both
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before and after the economic crisis. As a result,movements in nominal trade flows reflect changesin quantities reasonably well. With this in mind,Figure1.4showsyear-on-yeargrowthinthequarterlyvalueofworldtradeinseveralclassesofmanufacturedgoods.
All types of manufactured goods saw year-on-yeargrowth fall towards zero over the course of 2011. Forexample, world trade in automotive products slid from44percentinthefirstquarterof2010to10percentinthe fourth quarter of 2011. Office and telecomequipment went from positive to negative, as year-on-yeargrowth rates fell fromaroundplus14percent inthefirstquartertominus2percentinthefourthquarter.
5. Exchangerates
TheJapaneseyenandtheSwissfrancbothrecordedsignificantnominalappreciationsagainsttheUSdollarin 2011. The yen was up 10 per cent year-on-year,partlyduetothesafehavenroleofthecurrencyduringtimes of uncertainty. Meanwhile, the franc jumped17 per cent, prompting interventions by the SwissNationalBank incurrencymarkets to forcedown thevalueofthecurrency,especiallyagainsttheeuro.TheBrazilian real was also up 5.4 per cent against thedollar, and the Chinese yuan and Korean won rose4.7percentand4.3percent,respectively.Despitethesovereign debt crisis in Europe, the euro appreciated5percentagainstthedollar(seeFigure1.5).
Figure1.4: Quarterly world exports of manufactured goods by product, 2008Q1-2011Q4 (year-on-yearpercentagechange)
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Nominal exchange rates such as these may over- orunder-state the competitive effects of exchange ratemovements. As a result, “real effective” rates thataverage the exchange value of a currency againstmany trading partners while adjusting for differencesininflationratesmayprovideabetterindicationofthecompetitivenessofacountry’sexports.
Real effective exchange rates supplied by theInternationalMonetaryFundshowthattheUSdollar’sdepreciation in 2011 was even stronger in realeffective terms (-4.9percent) than innominal terms.On theother hand, theaverageappreciationof othermajor currencies was over-stated. The Japanese yenonly appreciated 1.7 per cent in real terms while theChinese yuan rose 2.7 per cent. Brazil’s currencyregistered a strong increase of 4.7 per cent in realeffective terms, while the euro’s rise of 1.8 per centwasrelativelysmall.
Total of above 3,480 83.8 - Total of above 3,140 81.2 -
World 4,150 100.0 11 World 3,865 100.0 10
a.preliminaryestimates.
Note: Figures for a number of countries and territories have been estimated. Annual percentage changes and rankings are affected bycontinuitybreaksintheseriesforalargenumberofeconomies,andbylimitationsincross-countrycomparability.
Source:WTOandUNCTADSecretariats.
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AppendixTable6:Leading exporters and importers in world trade in commercial services (excluding intra-EU(27) trade), 2011 (US$billionandpercentage)
Total of above 2,920 91.9 - Total of above 2,690 88.9 -
World (excl. intra-EU(27))
3,180 100.0 12 World (excl. intra-EU(27))
3,025 100.0 13
a.Preliminaryestimates.
Note: Figures for a number of countries and territories have been estimated. Annual percentage changes and rankings are affected bycontinuitybreaksintheseriesforalargenumberofeconomies,andbylimitationsincross-countrycomparability.
