WTO: Trade Recovered in 2002, Uncertainty Continues
<a href=www.agweb.com>AgWeb.com 4/23/2003 by Julianne Johnston
According to the latest World Trade Organization (WTO) figures, merchandise trade grew by 2.5% in 2002, up from a 1% decline in 2001. WTO says the increase is driven by strong demand in the United States and the big Asian economies.
But trade growth, which was significantly above the 1.5% increase in total world output, was uneven and masked the sluggish trade performance in many regions including Latin America and Western Europe, adds the group.
WTO says considerable uncertainty clouds trade growth prospects for 2003. Early indications suggest that at less than 3%, growth in trade volume for 2003 will be little or no better than 2002. This is well below half the average rate of trade growth achieved in the 1990s (6.7%). The downside risks on predictions for 2003 are large, bearing in mind continued sluggishness in the world economy, the conflict in Iraq, and the possibility of the continuing spread of the Severe Acute Respiratory Syndrome (SARS).
“These trade figures reflect the growing economic and political uncertainty in the world today. This uncertainty is detrimental to economic growth and development and can give rise to greater instability across the globe. Governments must send a signal that they are prepared to address this problem. One very important contribution to this effort would be to accelerate work on the negotiations in the Doha Development Agenda,” said Director-General Supachai Panitchpakdi.
The WTO says trade recovery occurred amidst the weakness of the global economy, greatly reduced investment flows, major movements in exchange rates, dented business confidence, increased restrictions on international trade transactions to reduce risks from terrorism and rising geopolitical tensions.
Some details of developments in specific countries or groups of countries:
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Developing Asia’s merchandise trade grew by about 12.5% in volume terms, driving the entire continent’s exports and imports to grow by double digits. The region also saw diverging growth paths between Japan, still Asia’s largest economy, and China and India, the two most populous nations in the world. In value terms, China’s merchandise exports and imports increased by more than 20% while India’s also grew at double-digit rates. China has overtaken the UK to become the fifth largest trader in the world. Japan’s merchandise export growth was only 3% while imports contracted.
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Transition economies’ trade continued to show strong growth with merchandise trade expanding by about 10% lifted by strong domestic demand growth and by rising foreign direct investment (FDI) inflows into the region.
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Imports into the US grew by 3% driven by continuing consumer spending and an increasingly expansionary fiscal stance. But exports declined by nearly 4% partly reflecting reduced demand from some key trading partners whose economies were either hardly growing, such as Western Europe and Japan, or in outright contraction, as in Latin America. Lack of price competitiveness might have also played a major role as US exports decreased even to those regions whose imports grew strongly.
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Western Europe’s trade stagnated in volume terms with merchandise exports increasing by just 0.6% and imports declining by 0.5%.
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Latin America saw one of its worst years with the crises in Argentina, Venezuela and difficulties in Brazil in the run-up to the national elections. Latin America’s merchandise imports declined by over 5% in 2002 although merchandise exports rose by about 2% with the decline in intra-regional trade (especially intra-MERCOSUR trade) being balanced by increased shipment to other regions.
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LDC exports and imports rose last year although it does not change their overall situation as marginal participants in world trade.
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Oil exporting LDCs saw a strong increase in the dollar value of their shipments as they increased their production and volume of trade. Exports of the non-fuel commodity exporting countries continued to rise after marked gains in 2001. However, exporters of manufactured goods experienced stagnation.