World trade slows sharply in 2001 amid the uncertain international situation

Trade in Western Europe and the transition economies is expected to increase somewhat more than 2%, while that of North America is likely to be below the global average. Japan is certain to experience a contraction in exports, coupled with a moderate growth in imports.

These projections are based on preliminary figures for the first half of 2001 which suggest that the deceleration of trade growth this year will be much sharper than previously expected (early in 2001, trade was expected to grow by about 7% this year). An important factor behind the sharper-than-expected slowdown in world economic growth is the steep fall in expenditure on information technology products. Other factors include the unexpectedly strong slowdown in demand growth in Western Europe and the stagnation of merchandise imports into the United States.

Growth in the value of North America's trade decelerated throughout the first six months of 2001, and in the second quarter both exports and imports were below their year-earlier levels. Western Europe's merchandise exports and imports values are estimated to have increased by only 2.5% and 1.5%, respectively (measured in euros, the increases are 9.5% and 8.5%, respectively). For the world as a whole, the value of merchandise trade was up only 1% in the first half, compared with a 12.5% gain for 2000 as a whole.

  
  
Strong growth in trade in 2000 back to top

The report notes that 2001 contrasts sharply with the outstanding growth in global output and trade in 2000, when the expansion of merchandise output and trade — by 4.5% and 12% respectively — was the strongest in more than a decade. Economic growth accelerated in all major regions in 2000. North America and developing Asia, which had each recorded GDP growth above the global average in 1999, recorded only moderate accelerations. In contrast, economic activity picked up strongly in South America and Russia, after stagnating the previous year. Africa's output growth is estimated to have strengthened in 2000, but to a level still below that of other developing nations, while Western Europe's economic growth increased to 3.4%, its strongest expansion in the last decade. Japan's recovery meanwhile remained modest and fragile.

The developing countries made an above average contribution to the vigorous expansion of world output and trade in 2000. The estimated 15% increase in the volume of merchandise exports from developing countries was three times faster than their GDP growth, and their shares in world trade and output continued to increase as it has done throughout the 1990s. Moreover, only a small part of this is the result of higher oil prices. It is due rather to their ability to expand their role in world exports of manufactured goods, the most dynamic part of world trade. Developing countries accounted for 27% of world exports of manufactures in 2000, a remarkable increase from their 17% share in 1990.

 
Among other developments in 2000 highlighted in the study are:

 

• The value of world merchandise exports was up 12.5% in 2000, triple the 1999 growth rate, to $6.2 trillion. World exports of commercial services rose 6% in 2000 reaching $1.4 trillion, with transportation services showing the strongest growth.
    

• The product categories in merchandise trade with the highest growth were fuels (up 50% to $630 billion) and office and telecom equipment (up 20% to $940 billion). Exports of agricultural products recorded the weakest growth of all major product categories (up 2% to $560 billion).
    

• High growth in the information technology sector was particularly beneficial for North America and Asia, while the rise in world energy demand and the recovery of oil prices boosted the economies of the oil exporting countries.
    

• The value of North American merchandise exports rose by 12.5%, more than twice as fast as in the preceding year and faster than the 10% increase in exports of commercial services from the region.
    

• Western Europe recorded its fastest trade and output growth — on a volume basis — in the past decade, as merchandise exports and imports rose by about 10%, twice as fast as in the preceding year.
    

• Latin America's sharp rise in output in 2000 was mainly due to the recovery in Brazil and strong GDP growth in Mexico. The latter's real trade growth was three to four times higher than that of the rest of Latin America last year.
    

• Asia and the transition economies recorded both the highest export growth among the major regions and the largest increase in imports, highlighting once again that dynamic exporters are dynamic importers. Despite the moderate acceleration of Asia's economic growth in 2000, its trade volume surged by more than 15%, about twice the average growth rate for the 1990s.
    

• The dollar value of Africa's merchandise exports rose by more than one-quarter last year, lifting Africa's share to 2.3% of world merchandise exports.
    

• The 49 least-developed countries (LDCs) as a group shared in the dynamic global output and trade expansion, as their GDP and trade growth exceeded the global average. The US dollar value of their merchandise exports rose by 28% although with highly divergent developments by country.
    

• These differences in the export performance among the LDCs can be largely attributed to their product structure. Oil-exporting LDCs boosted their export values between 60 and 120% and the seven LDCs exporting primarily manufactured goods recorded a rise of 23%. However, exporters of non-fuel primary products — the majority of LDCs — as well as countries with civil strife, recorded a decline in their export earnings last year.
    

• Trade developments of Regional Trade Agreements showed a great variation in 2000. Intra-trade of MERCOSUR and ASEAN expanded faster than total merchandise trade while for the EU and CEFTA intra-regional trade rose less rapidly than extra-regional trade. Intra-trade of NAFTA expanded faster than its exports to other regions. However, NAFTA imports from other regions rose as fast as its intra-trade.
    

• Intra-regional trade accounts for a smaller share of total trade in commercial services than for merchandise trade in both the EU and NAFTA. For the EU the share of intra-trade in commercial services was 55% in 2000, roughly unchanged from the early 1990s. For NAFTA, the share in 2000 was, at less than one quarter of total services trade, about half the rate recorded for merchandise trade.