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Trade Working Group 5thMeetingMarch 26, 2015
Ankara, Turkey
Making Cooperation Work
For Building an Interdependent Islamic World
COMCEC Trade OUTLOOK
2014
COMCEC STRATEGY
OUTLINE
• Recent Trends in Trade Between OIC
Member States and the World
• Recent Trends in Intra-OIC Trade
• Effects of Steep Fall in Oil Prices on OIC
Countries(MENAP Region)
1
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
TRADE BETWEEN OIC and the
WORLD
1
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Total OIC exports fell by 3.1 per cent in 2013
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source: SESRIC
Main Factors Accounting For The Weakness Of Total OIC Exports In 2013
• The slow pace of world demand
growth
• Falling commodity prices
• Ongoing political instability in the Middle East and oil supply disruptions
1
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
World trade growth remained sluggish in 2013
1
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source: WTO Database
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Falling Commodity Prices in 2013
Source: IMF Database
Prices of Selected Commodities Exported by the OIC Members
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source: IMF Database
(2005=100)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
The share of OIC countries in global exports declined to 11.8 per cent in 2013
Source: SESRIC, WTO
Share of OIC countries in global trade increased in value terms but not in volume
terms
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source: UNCTADSTAT, IMF
Top performers in total OIC exports in 2013
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source: SESRIC
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
High country concentration in total OIC exports
Source: UNCTADSTAT
Table 1: Major Destinations of OIC Exports
Countries 2011 2012 2013 2011 2012 2013
China 224 242 254 11.3 11.8 12.7
Japan 232 246 236 11.7 12.0 11.8
India 178 202 193 9.0 9.8 9.7
United States 199 191 169 10.1 9.3 8.5
Korea, Republic of 146 155 153 7.4 7.6 7.6
Singapore 93 101 99 4.7 4.9 5.0
Italy 96 98 86 4.9 4.8 4.3
France 67 61 63 3.4 3.0 3.2
Thailand 50 55 59 2.5 2.7 3.0
Netherlands 56 59 57 2.8 2.9 2.9
Euro area 384 386 367 19.4 18.8 18.3Total of Top Ten Countries
1,341 1,409 1,370 67.9 68.6 68.4
(Billion $) Share %
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Dominance of mineral fuels and oils in total OIC exports
Source:ITC Trademap
OIC Exports to World - Top 10 Items (2013, Billion $)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Share of Petroleum in Total Exports, 2013 (%)
Source: UN Comtrade
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Share of Commodities in Total Exports, 2013 (%)
Source: UN Comtrade
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
The total OIC imports dominated by the leading exporters in 2013
Source:SESRIC
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Total OIC imports originated mainly from developed countries
Source: UNCTADSTAT
Countries 2011 2012 2013 2011 2012 2013
China 208 236 265 15.2 16.1 17.2
United States 124 129 137 9.0 8.8 8.8
India 86 91 101 6.3 6.2 6.5
Germany 86 91 98 6.3 6.2 6.3
Japan 80 87 79 5.8 6.0 5.1
Singapore 71 73 74 5.2 5.0 4.8
Russian Federation 60 71 70 4.3 4.8 4.5
Korea, Republic of 67 68 69 4.9 4.7 4.4
Italy 60 62 67 4.3 4.2 4.3
France 64 62 66 4.7 4.3 4.3
Euro area 316 328 357 23.0 22.4 23.1Total of Top Ten Countries
907 971 1,024 66.0 66.3 66.3
(Billion $) Share %
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Product diversification of total OIC imports was higher
Source: ITC
(2013, Billion $)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
INTRA-OIC TRADE
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Share of intra-OIC trade peaked at 18.7 per cent in 2013
Source: SESRIC
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Major players in intra OIC trade in 2013
Source:SESRIC
(Billion $)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Intra-OIC exports concentrated on a few commoditites
Source: ITC Trademap
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
20 per cent intra-OIC trade target was surpassed by 30 Member States by 2013
Source:SESRIC
Member States Having the Biggest Intra-OIC Trade
Share (%)
Member States Having the Lowest Intra-OIC Trade Share
(%)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Source:SESRIC
EFFECTS OF STEEP FALL in OIL
PRICES on OIC MEMBER STATES
(MENAP REGION)
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Oil prices fell from an average of 110 ($/pb) in the last three years to 48($/pb) in January
2015
Source: IMF Commodity Prices Database
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
The steep decline in oil prices have been driven by both supply and demand factors along with the effects of monetary policies
ON THE SUPPLY SIDE
-Higher than-expected supply, particularly from the United States-OPEC’s policy shift to maintain production and thus the market share
ON THE DEMAND SIDE :
Weakening Oil Demand Especially from China, Japan and the Euro Area
EFFECTS OF THE MONETARY POLICIESReal interest rates U.S. dollar appreciation
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Growth is expected to weaken in most countries except U.S in 2015
Figure: Real GDP Growth EstimationsWorld US Euro Area Emerging Markets China Russia
Total Oil Exporters Oil Importers2014 3.3 2.4 0.9 4.4 7.4 0.6 2.8 2.7 3.0
2015 3.5 3.6 1.2 4.3 6.8 -3.0 3.3 3 3.9
Revision from Fall 2014 IMF Outlook
-0.3 0.5 -0.2 -0.6 -0.3 -3.5 -0.6 -0.9 0.0
2016 3.7 3.3 1.5 4.7 6.3 -1.0 3.9 3.7 4.5
Revision from Fall 2014 IMF Outlook
-0.3 0.5 -0.2 -0.6 -0.3 -2.5 -0.5 -0.9 0.2
Source: IMF WEO Update January 2015Note: MENAP Oil Exporters include :Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, UAE and Yemen MENAP Oil Importers include :Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauitania, Morocco, Pakistan, Sudan, Syria and Tunisia.
Middle East and Nort Africa
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
There is an inverse relation between US dollar effective exchange rate and the oil prices
Source:FED,IMF
Figure: US Dollar Effective Exchange Rates versus Brent Oil Prices
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Kuwait, Qatar, Iraq, Oman, Libya, and Saudi Arabia are expected to be the most affected countries from the
steep decline in oil prices
Source:IMF Regional Economic Outlook 2015 January Update
Figure: External Loss Estimates from Lower Oil Prices, 2015
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Most Oil Exporters need oil prices well above 57 dollars to balance their budgets
Source: IMF Regional Economic Outlook, 2015 January Update
Figure: Fiscal Breakeven Oil Prices (U.S. Dollars per barrel)
2015 oil price
estimate
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Sharp falls in oil prices are expected to lead to significant declines both in the fiscal balances and external balances in
the MENAP region
Source: IMF Regional Economic Outlook, 2015 January UpdateNote: Figures for 2015 and 2016 are estimates.Note: MENAP Oil Exporters include :Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, UAE and Yemen MENAP Oil Importers include :Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauitania, Morocco, Pakistan, Sudan, Syria and
Tunisia.
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
While Saudi Arabia and the Gulf states having significant reserves can sustain a lower oil price, Algeria, Iran, Iraq and
Yemen are more vulnerable
Source: IMF Regional Economic Outlook, 2015 January Update
For Building an Interdependent Islamic WorldCOMCEC STRATEGY
Making Cooperation Work
Oil exporters need to diversify exports to reduce vulnerabilities due to oil price swings
• Oil prices is expected to be volatile on the short term
• Given the negative effects of oil price swings, Oil exporters will need to further diversify their economies
2013 2014 2015 2016 2017 2018 2019 2020 2021
Crude oil, avg, spot $/ bbl 104.1 96.2 53.2 56.9 60.8 65.0 69.4 74.1 79.2
Source: : World Bank Commodity Markets Outlook, January 2015
Trade Working Group Meeting
Thank You
March 26 th, 2015Ankara, Turkey
Making Cooperation Work
For Building an Interdependent Islamic WorldCOMCEC STRATEGY