WTO NEWS: 2003 PRESS RELEASES
5 November 2003
Supachai: sluggish trade growth calls for urgent pick up of stalled trade talks
Fuelled by strong import demand in developing Asia, transition economies and the United States world trade recovered in 2002 from its steep 2001 decline. But real growth of 3% was only half the rate of trade expansion in the 1990s and weak fourth quarter growth and the near stagnation of trade flows in the first half of 2003 have diminished hopes for a rapid recovery in world trade figures.
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This sluggish performance in global trade and the prospects for weak
trade expansion in 2003 reinforces the already pressing need for WTO
member governments to get global trade negotiations back on track, said
Director-General Supachai Panitchpakdi.
“The world’s political leaders must focus their attention on the stalled Doha Development Agenda and demonstrate their willingness to spur the global economy through greater trade liberalization and more equitable trade rules. The near stagnation of trade growth in the first half of 2003 underlines the urgency for governments to get back to the negotiating table and to work towards building a stronger and more vibrant trading system,” said Director-General Supachai, following release of the WTO’s International Trade Statistics 2003.
Highlights from the WTO International Trade Statistics 2003
A weak trade recovery in 2002 was followed by a near stagnation of trade flows in the first half of 2003. The sluggishness of international trade reflects above all the weak economic growth in the OECD countries and in particular Western Europe. Uncertainty about the global economic prospects increased in the early months of 2003 due to the emergence of SARS and the tensions in the Middle East. While the economic impact of SARS was largely confined to one region (East Asia) and a few sectors (the tourism industry and air transportation), the situation in the Middle East contributed to an increase in energy prices worldwide and had thereby an impact on the global recovery.
In 2002, world trade recovered from its steep decline in 2001. The average annual rate of merchandise trade expansion in 2002 was limited to 3% in real terms, only half the rate observed in the 1990s.
The trade recovery in 2002 benefited from strong import demand in developing Asia, the transition economies and the United States. Sluggish import demand in Western Europe and a sharp contraction of Latin America’s imports constituted a drag on global trade expansion.
A combination of declining exports and rising imports by the United States has led to a record trade and current account deficit, the latter equivalent to 5% of its GDP. United States’ merchandise trade recorded a deficit in all seven geographic regions, with all its six major trading partners and in 15 of the 17 merchandise product groups distinguished in this report.
China’s trade expansion (both exports and imports) remained outstanding. In the 1990s, China’s trade growth was three times faster than global trade and between 2000 and 2002 its exports and imports rose by 30%, while world trade stagnated. China has become the fourth largest merchandise trader (if one counts the EU as a single trader) in 2002.
Chemicals emerged as the product group with the strongest trade growth over the last two years. Driven by pharmaceutical trade among the developed countries, its share in world merchandise exports rose above 10%, exceeding in value not only world trade in automotive products, but also that of agricultural products.
In the first half of 2003 world merchandise exports rose by 15% in dollar terms over the corresponding period in 2002, a strong acceleration compared to the average 4% annual growth in 2002. The depreciation of the US dollar and higher oil and non-fuel commodity prices contributed to the dollar price and value increase in international trade.
Adjusted for price and exchange rate changes, a different and less bright trade picture emerges. OECD countries’ real exports in goods and services have stagnated from the fourth quarter of 2002 through the second quarter of 2003 (on a seasonally adjusted basis).
Developments in the first half of 2003 and the improvements of the leading indicators in the third quarter lead to a projection of world merchandise trade growth of 3%, basically unchanged from the preceding year’s rate.