article as a follow up to the trading system where I compared waiting fo r a market correctio n with enterin g immediately after a new high or low . Trend following, or trend trading as it is sometimes called, is one of the oldest technical trading strategies out there and despite it's fallin popularity in recent years, it is still one of the most effective technical trading strategies there is.However, despite trend trading strategies still being relatively effective on many markets, takingadvantage of the trend has become more and more difficult in recent years and as a resultmechanica l trading systems that seek to utilise the effects of the long-term underlying trend dotend to need to be a little more sophisticated than they once were.The oldest mechanical trend following systems are probably the Donchian Channel breakouts andthe Simple Moving Average crossover syst ems of old. These ol d fashioned trend trading s trategiessimply a imed to take advantage of the trend by buying on a new high and waiting for the marketto go even higher still, or sell on a new low and wait for the price to fall even further before closingthe short position by buying it back again. Old fashioned trend trading strategies like these areprobably still the best way to trade large liquid markets that are moved by macro-economicfundamentals. When economic fundamentals, governments, and their central banks are drivingthe market there tends to be strong clean trends to trade, and old fashion Donchian Channeltrading systems and the likes tend to do very well on these markets. Unfortunately though, mostmarkets nowadays are not actually driven by market fundamentals and global economic policies.First world governments rarely interfere in stock and commodities markets and financialinstit utions and high worth individuals now have access to so much capital to be used for purelyspeculative purposes that their speculation is what is driving most markets; only the likes of theForex market (at least the major currency pairs anyway), the Bond market and things like interestrate markets are large enough to have a reasonable degree of resistance to the whims of speculators.Markets that are being driven b y economic fundamentals behave very differently to markets thatare being driven by speculation; the single biggest difference is that markets don't trend toproduce clean trends (except when they are forming a speculative bubble) when they are driven by speculation. The trend can (and usuall y does) still exis t when the market is begin driven byspecula tion, but things like s upport and resistance plays a much larger role as speculators aim tobuy on short-term dips and sell quickly and take their profits on short-term peaks. This constantbuying and profit taking means that any longer-term underlying trend will tend to be 'choppy' andto be successful any trend trading strategy must take this 'choppiness' caused by speculatorsaiming to buy low and sell high into account. So while any long-term underlying directional bias(the trend) may not be clean enough to be tradable with old fashioned trend trading strategiesand systems due to the effects of speculators speculating, the directional bias usually still existsand it is still unwise to go against it.As the reader will no doubt have gathered, I b elieve that the best way to trade a speculativedriven market is to buy on a dip and sell on a high during an up trend; or go short on a high andclose the short on a dip during a down trend. It sounds easy enough, but the difficult part of building a trend trading system to do this is distinguishing between a genuine dip or peak and achange in the trend. It is also very difficult to tell when a dip or peak is likel y to end, but for thepurposes of this article I just want to focus on distinguishing between a genuine dip or peak and achange in the long-term underling directional bias/trend.
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article as a follow up to the trading system where I compared waiting for a market correction with entering immediately after a
new high or low Trend following or trend trading as
it is sometimes called is one of the oldest technical trading strategies out there and despite its fallin popularity in recent years itis still one of the most effective technical trading strategies there isHowever despite trend trading strategies still being relatively
effective on many markets takingadvantage of the trend has become more and more difficult in recent years and as aresultmechanical trading systems that seek to utilise the effects of the long-term underlying trend dotend to need to be a little
more sophisticated than they once wereThe oldest mechanical trend following systems are probably the Donchian Channel breakouts andthe Simple Moving Average crossover systems of old These old fashioned trend trading strategiessimply aimed to
take advantage of the trend by buying on a new high and waiting for the marketto go even higher still or sell on a new low andwait for the price to fall even further before closingthe short position by buying it back again Old fashioned trend tradingstrategies like these areprobablystill
the best way to trade large liquid markets that are moved by macro-economicfundamentals When economic fundamentalsgovernments and their central banks are drivingthe market there tends to be strong clean trends to trade and old fashionDonchian Channeltrading systems and the likes tend to do very well on these markets Unfortunately though mostmarketsnowadays are not actually driven by market fundamentals and global economic policiesFirst world governments rarely interfere
in stock and commodities markets and financialinstitutions and high worth individuals now have access to so much capital to beused for purelyspeculative purposes that their speculation is what is driving most markets only the likes of theForex market (atleast the major currency pairs anyway) the Bond market and things like interestrate markets are large enough to have areasonable degree of resistance to the whims of speculatorsMarkets that are being driven by economic fundamentals behave very
differently to markets thatare being driven by speculation the single biggest difference is that markets dont trend toproduce clean
trends (except when they are forming a speculative bubble) when they are driven
by speculation The trend can (and usually does) still exist when the market is begin driven byspeculation but things like support
and resistance plays a much larger role as speculators aim tobuy on short-term dips and sell quickly and take their profits onshort-term peaks This constantbuying and profit taking means that any longer-term underlying trend will tend to be choppy
andto be successful any trend trading strategy must take this choppiness caused by speculatorsaiming to buy low and sell highinto account So while any long-term underlying directional bias(the trend) may not be clean enough to be tradable with oldfashioned trend trading strategiesand systems due to the effects of speculators speculating the directional bias usually stillexistsand it is still unwise to go against itAs the reader will no doubt have gathered I believe that the best way to trade a
speculativedriven market is to buy on a dip and sell on a high during an uptrend or go short on a high andclose the short on a dipduring a down trend It sounds easy enough but the difficult part of building a trend trading system to do this is distinguishing
between a genuine dip or peak and achange in the trend It is also very difficult to tell when a dip or peak is likely to end but for thepurposes of this article I just want to focus on distinguishing between a genuine dip or peak and achange in the long-term
underling directional biastrend
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Trade to remain subdued in 2013 after sluggish growthin 2012 as European economies continue to struggle
World trade growth fell to 20 in 2012 mdash down from 52 in 2011 mdash and isexpected to remain sluggish in 2013 at around 33 as the economic slowdown inEurope continues to suppress global import demand WTO economists reported on 10April 2013 ldquoThe events of 2012 should serve as a reminder that the structural flaws ineconomies that were revealed by the economic crisis have not been fully addresseddespite important progress in some areas Repairing these fissures needs to be thepriority for 2013rdquo Director-General Pascal Lamy said
The abrupt deceleration of trade in 2012 was attributed to slow growth indeveloped economies and recurring bouts of uncertainty over the future of theeuro Flagging output and high unemployment in developed countries reducedimports and fed through to a lower pace of export growth in both developedand developing economies
Improved economic prospects for the United States in 2013 should only partlyoffset the continued weakness in the European Union whose economy is
expected to remain flat or even contract slightly this year according toconsensus estimates
Chinarsquos growth should continue to outpace other leading economies cushioningthe slowdown but exports will still be constrained by weak demand in EuropeAs a result 2013 looks to be a near repeat of 2012 with both trade and outputexpanding slowly below their long-term average rates (Chart 1)
ldquoThe events of 2012 should serve as a reminder that the structural flaws ineconomies that were revealed by the economic crisis have not been fullyaddressed despite important progress in some areas Repairing these fissuresneeds to be the priority for 2013rdquo Director General Pascal Lamy said
ldquoAttempts by developed economies to strike a balance between short-termgrowth and increasingly binding fiscal constraints have produced uneven resultsto date and finding an appropriate mix of policies has proven to bechallenging Similarly the amount of progress that developing economies havemade in reducing their reliance on external demand is still unclear
ldquoAs long as global economic weakness persists protectionist pressure will buildand could eventually become overwhelming The threat of protectionism maybe greater now than at any time since the start of the crisis since other polices
gt Download this pressrelease (pdf format27 pages 313KB)
10042013Director-General PascalLamy announces world tradefigures at WTO pressconference
Audiogt Press Conferencegt help
Video
gt Interview Trade figures2013
gt Press conference WTO
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to restore growth have been tried and found wanting
ldquoTo prevent a self-destructive lapse into economic nationalism countries needto refocus their attention on reinforcing the multilateral trading system Tradecan once again be an engine of growth and a source of strength for the global
economy rather than a barometer of instability The way is before us we onlyneed to find the willrdquo Mr Lamy said
Chart1 Growth in the volume of world merchandise trade and GDP 2005-14a
Annual change
a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The preliminary estimate of 20 growth for world trade in 2012 is 05 pointsbelow the WTOrsquos most recent forecast of 25 from September 2012 Thedeviation is mostly explained by the worse than expected second-halfperformance of developed economies which only managed a 1 increase inexports and a 01 decline in imports for the year The growth of exports fromdeveloping economies (which for the purposes of this analysis includes theCommonwealth of Independent States) was in line with earlier predictions butthe rate for imports was less than expected WTO economists cautioned that
their trade forecasts for 2013 and 2014 were difficult to gauge due to divergentoutlooks for the US and EU
These figures refer to merchandise trade in volume terms ie adjusted toaccount for inflation and exchange rate movements but nominal (dollar-value)trade flows for both merchandise and commercial services display similartrends
In 2012 the dollar value of world merchandise exports only increased two
trade figures 2013
RSS news feeds
gt Problems viewing thispagePlease contactwebmasterwtoorg givingdetails of the operatingsystem and web browser youare using
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tenths of one per cent (ie 02) to $183 trillion leaving it essentiallyunchanged The slower growth in the dollar value of world trade compared totrade in volume terms is explained by falling prices for traded goods Some ofthe biggest price declines were recorded for commodities such as coffee (ndash22) cotton (ndash42) iron ore (ndash23) and coal (ndash21) according to IMF commodity
price statistics
The value of world commercial services exports rose just 2 in 2012 to $43trillion with strong differences in growth rates across countries and regionsFor example the US saw its exports of commercial services climb 4 whilethose of Germany dropped 2 and Francersquos tumbled 7 On the import sideseveral European countries recorded sharp declines including Italy (ndash8)France (ndash10) Portugal (ndash16) and Greece (ndash18)
The trade forecast for 2013 assumes 21 growth in world output at marketexchange rates (unchanged from 2012) based on a consensus of economicforecasters Risks to the forecast are firmly rooted on the downside and aremostly linked to the sovereign debt crisis in Europe
Accelerated fiscal consolidation in the US could also undermine the forecast ifbrinksmanship over budget negotiations between the executive and legislativebranches leads to miscalculation As always unexpected events such asgeopolitical tensions and natural disasters could also intrude to disrupt trade
On a more positive note some factors that held back trade growth in 2012 maysubside in 2013 including the recent territorial dispute that soured traderelations between Japan and China
Indicators of production business sentiment and employment in the firstquarter of 2013 paint a mixed picture of current economic conditions
Purchasing managersrsquo indices suggest that the euro-zone downturn may haveaccelerated despite continued resilience in Germany At the same time the USrecorded a strong rise in manufacturing Japanrsquos production growth was lessnegative and China and the Republic of Korea showed modest improvements
Unemployment in the US recently fell to its lowest level since before theeconomic crisis at 76 whereas the rate for the euro area stands at close to12 Together these indicators point to weak import demand in Europe even asconditions gradually improve elsewhere In light of the large weight of the EU inworld imports (32 in 2012 including trade within the EU 15 excluding it) thissuggests slow growth for trade in the early part of 2013
More details on tradedevelopments in 2012
WTO statistics on short-term tradedevelopments illustrate the divergenttrade performances of major economiesover the course of 2012 Chart 2 showsseasonally-adjusted quarterlymerchandise trade volume indices for the
Chart 2 mdash Quarterly merchandise trade flows of selected economies 2010Q1-2012Q4Seasonally adjusted volume indices 2010Q1=100
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US the EU Japan and developing Asia(including China) Exports from the US andfrom the EU to the rest of the world (ieEU-extra exports) remained relativelystrong for most of the year before dipping
slightly in the fourth quarter (Q4) Asianexports also held up relatively wellfinishing the year on a positive note afterpausing in the third quarter (Q3)
Meanwhile Japanrsquos shipments of goodsdropped 11 in the last two quarters ofthe year This downturn appears to havebeen caused by a deterioration of Japanrsquostrade with China Annual figures onmerchandise trade in dollar terms showthat the value of Japanrsquos exports declinedby 3 in 2012 However shipments to
China which represent around 20 of thecountryrsquos exports were down 11 year-on-year while exports to otherdestinations only declined by 1
On the import side the EU maintained itsrecent downward trajectory with Q4imports from the rest of the world fallingto 5 below their level in the middle of2011 and imports from other EU countries(ie intra-EU trade) slipping by the sameamount
Japanese imports recorded strong growthfor most of the year before dropping 6 inQ4 The rise in imports in the earlierquarters was partly due to increasedpurchases of fuels from abroad for use inconventional thermal electricitygeneration following the loss of outputfrom nuclear power stations after theFukushima disaster The dollar value ofJapanese imports rose 35 in 2012 butimports from Saudi Arabia were up 8 andpurchases from Qatar (mostly natural gas)rose 19 Japanrsquos merchandise trade
deficit of $87 billion for 2012 was thelargest ever recorded for the country in adataset stretching back to 1948
Quarterly developments for trade incommercial services show a similarpattern to trade in goods with year-on-year growth in dollar values flat or
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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Trade to remain subdued in 2013 after sluggish growthin 2012 as European economies continue to struggle
World trade growth fell to 20 in 2012 mdash down from 52 in 2011 mdash and isexpected to remain sluggish in 2013 at around 33 as the economic slowdown inEurope continues to suppress global import demand WTO economists reported on 10April 2013 ldquoThe events of 2012 should serve as a reminder that the structural flaws ineconomies that were revealed by the economic crisis have not been fully addresseddespite important progress in some areas Repairing these fissures needs to be thepriority for 2013rdquo Director-General Pascal Lamy said
The abrupt deceleration of trade in 2012 was attributed to slow growth indeveloped economies and recurring bouts of uncertainty over the future of theeuro Flagging output and high unemployment in developed countries reducedimports and fed through to a lower pace of export growth in both developedand developing economies
Improved economic prospects for the United States in 2013 should only partlyoffset the continued weakness in the European Union whose economy is
expected to remain flat or even contract slightly this year according toconsensus estimates
Chinarsquos growth should continue to outpace other leading economies cushioningthe slowdown but exports will still be constrained by weak demand in EuropeAs a result 2013 looks to be a near repeat of 2012 with both trade and outputexpanding slowly below their long-term average rates (Chart 1)
ldquoThe events of 2012 should serve as a reminder that the structural flaws ineconomies that were revealed by the economic crisis have not been fullyaddressed despite important progress in some areas Repairing these fissuresneeds to be the priority for 2013rdquo Director General Pascal Lamy said
ldquoAttempts by developed economies to strike a balance between short-termgrowth and increasingly binding fiscal constraints have produced uneven resultsto date and finding an appropriate mix of policies has proven to bechallenging Similarly the amount of progress that developing economies havemade in reducing their reliance on external demand is still unclear
ldquoAs long as global economic weakness persists protectionist pressure will buildand could eventually become overwhelming The threat of protectionism maybe greater now than at any time since the start of the crisis since other polices
gt Download this pressrelease (pdf format27 pages 313KB)
10042013Director-General PascalLamy announces world tradefigures at WTO pressconference
Audiogt Press Conferencegt help
Video
gt Interview Trade figures2013
gt Press conference WTO
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to restore growth have been tried and found wanting
ldquoTo prevent a self-destructive lapse into economic nationalism countries needto refocus their attention on reinforcing the multilateral trading system Tradecan once again be an engine of growth and a source of strength for the global
economy rather than a barometer of instability The way is before us we onlyneed to find the willrdquo Mr Lamy said
Chart1 Growth in the volume of world merchandise trade and GDP 2005-14a
Annual change
a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The preliminary estimate of 20 growth for world trade in 2012 is 05 pointsbelow the WTOrsquos most recent forecast of 25 from September 2012 Thedeviation is mostly explained by the worse than expected second-halfperformance of developed economies which only managed a 1 increase inexports and a 01 decline in imports for the year The growth of exports fromdeveloping economies (which for the purposes of this analysis includes theCommonwealth of Independent States) was in line with earlier predictions butthe rate for imports was less than expected WTO economists cautioned that
their trade forecasts for 2013 and 2014 were difficult to gauge due to divergentoutlooks for the US and EU
These figures refer to merchandise trade in volume terms ie adjusted toaccount for inflation and exchange rate movements but nominal (dollar-value)trade flows for both merchandise and commercial services display similartrends
In 2012 the dollar value of world merchandise exports only increased two
trade figures 2013
RSS news feeds
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tenths of one per cent (ie 02) to $183 trillion leaving it essentiallyunchanged The slower growth in the dollar value of world trade compared totrade in volume terms is explained by falling prices for traded goods Some ofthe biggest price declines were recorded for commodities such as coffee (ndash22) cotton (ndash42) iron ore (ndash23) and coal (ndash21) according to IMF commodity
price statistics
The value of world commercial services exports rose just 2 in 2012 to $43trillion with strong differences in growth rates across countries and regionsFor example the US saw its exports of commercial services climb 4 whilethose of Germany dropped 2 and Francersquos tumbled 7 On the import sideseveral European countries recorded sharp declines including Italy (ndash8)France (ndash10) Portugal (ndash16) and Greece (ndash18)
The trade forecast for 2013 assumes 21 growth in world output at marketexchange rates (unchanged from 2012) based on a consensus of economicforecasters Risks to the forecast are firmly rooted on the downside and aremostly linked to the sovereign debt crisis in Europe
Accelerated fiscal consolidation in the US could also undermine the forecast ifbrinksmanship over budget negotiations between the executive and legislativebranches leads to miscalculation As always unexpected events such asgeopolitical tensions and natural disasters could also intrude to disrupt trade
On a more positive note some factors that held back trade growth in 2012 maysubside in 2013 including the recent territorial dispute that soured traderelations between Japan and China
Indicators of production business sentiment and employment in the firstquarter of 2013 paint a mixed picture of current economic conditions
Purchasing managersrsquo indices suggest that the euro-zone downturn may haveaccelerated despite continued resilience in Germany At the same time the USrecorded a strong rise in manufacturing Japanrsquos production growth was lessnegative and China and the Republic of Korea showed modest improvements
Unemployment in the US recently fell to its lowest level since before theeconomic crisis at 76 whereas the rate for the euro area stands at close to12 Together these indicators point to weak import demand in Europe even asconditions gradually improve elsewhere In light of the large weight of the EU inworld imports (32 in 2012 including trade within the EU 15 excluding it) thissuggests slow growth for trade in the early part of 2013
More details on tradedevelopments in 2012
WTO statistics on short-term tradedevelopments illustrate the divergenttrade performances of major economiesover the course of 2012 Chart 2 showsseasonally-adjusted quarterlymerchandise trade volume indices for the
Chart 2 mdash Quarterly merchandise trade flows of selected economies 2010Q1-2012Q4Seasonally adjusted volume indices 2010Q1=100
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US the EU Japan and developing Asia(including China) Exports from the US andfrom the EU to the rest of the world (ieEU-extra exports) remained relativelystrong for most of the year before dipping
slightly in the fourth quarter (Q4) Asianexports also held up relatively wellfinishing the year on a positive note afterpausing in the third quarter (Q3)
Meanwhile Japanrsquos shipments of goodsdropped 11 in the last two quarters ofthe year This downturn appears to havebeen caused by a deterioration of Japanrsquostrade with China Annual figures onmerchandise trade in dollar terms showthat the value of Japanrsquos exports declinedby 3 in 2012 However shipments to
China which represent around 20 of thecountryrsquos exports were down 11 year-on-year while exports to otherdestinations only declined by 1
On the import side the EU maintained itsrecent downward trajectory with Q4imports from the rest of the world fallingto 5 below their level in the middle of2011 and imports from other EU countries(ie intra-EU trade) slipping by the sameamount
Japanese imports recorded strong growthfor most of the year before dropping 6 inQ4 The rise in imports in the earlierquarters was partly due to increasedpurchases of fuels from abroad for use inconventional thermal electricitygeneration following the loss of outputfrom nuclear power stations after theFukushima disaster The dollar value ofJapanese imports rose 35 in 2012 butimports from Saudi Arabia were up 8 andpurchases from Qatar (mostly natural gas)rose 19 Japanrsquos merchandise trade
deficit of $87 billion for 2012 was thelargest ever recorded for the country in adataset stretching back to 1948
Quarterly developments for trade incommercial services show a similarpattern to trade in goods with year-on-year growth in dollar values flat or
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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to restore growth have been tried and found wanting
ldquoTo prevent a self-destructive lapse into economic nationalism countries needto refocus their attention on reinforcing the multilateral trading system Tradecan once again be an engine of growth and a source of strength for the global
economy rather than a barometer of instability The way is before us we onlyneed to find the willrdquo Mr Lamy said
Chart1 Growth in the volume of world merchandise trade and GDP 2005-14a
Annual change
a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The preliminary estimate of 20 growth for world trade in 2012 is 05 pointsbelow the WTOrsquos most recent forecast of 25 from September 2012 Thedeviation is mostly explained by the worse than expected second-halfperformance of developed economies which only managed a 1 increase inexports and a 01 decline in imports for the year The growth of exports fromdeveloping economies (which for the purposes of this analysis includes theCommonwealth of Independent States) was in line with earlier predictions butthe rate for imports was less than expected WTO economists cautioned that
their trade forecasts for 2013 and 2014 were difficult to gauge due to divergentoutlooks for the US and EU
These figures refer to merchandise trade in volume terms ie adjusted toaccount for inflation and exchange rate movements but nominal (dollar-value)trade flows for both merchandise and commercial services display similartrends
In 2012 the dollar value of world merchandise exports only increased two
trade figures 2013
RSS news feeds
gt Problems viewing thispagePlease contactwebmasterwtoorg givingdetails of the operatingsystem and web browser youare using
7292019 Article as a Follow Up to the Trading System Where I Compared
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tenths of one per cent (ie 02) to $183 trillion leaving it essentiallyunchanged The slower growth in the dollar value of world trade compared totrade in volume terms is explained by falling prices for traded goods Some ofthe biggest price declines were recorded for commodities such as coffee (ndash22) cotton (ndash42) iron ore (ndash23) and coal (ndash21) according to IMF commodity
price statistics
The value of world commercial services exports rose just 2 in 2012 to $43trillion with strong differences in growth rates across countries and regionsFor example the US saw its exports of commercial services climb 4 whilethose of Germany dropped 2 and Francersquos tumbled 7 On the import sideseveral European countries recorded sharp declines including Italy (ndash8)France (ndash10) Portugal (ndash16) and Greece (ndash18)
The trade forecast for 2013 assumes 21 growth in world output at marketexchange rates (unchanged from 2012) based on a consensus of economicforecasters Risks to the forecast are firmly rooted on the downside and aremostly linked to the sovereign debt crisis in Europe
Accelerated fiscal consolidation in the US could also undermine the forecast ifbrinksmanship over budget negotiations between the executive and legislativebranches leads to miscalculation As always unexpected events such asgeopolitical tensions and natural disasters could also intrude to disrupt trade
On a more positive note some factors that held back trade growth in 2012 maysubside in 2013 including the recent territorial dispute that soured traderelations between Japan and China
Indicators of production business sentiment and employment in the firstquarter of 2013 paint a mixed picture of current economic conditions
Purchasing managersrsquo indices suggest that the euro-zone downturn may haveaccelerated despite continued resilience in Germany At the same time the USrecorded a strong rise in manufacturing Japanrsquos production growth was lessnegative and China and the Republic of Korea showed modest improvements
Unemployment in the US recently fell to its lowest level since before theeconomic crisis at 76 whereas the rate for the euro area stands at close to12 Together these indicators point to weak import demand in Europe even asconditions gradually improve elsewhere In light of the large weight of the EU inworld imports (32 in 2012 including trade within the EU 15 excluding it) thissuggests slow growth for trade in the early part of 2013
More details on tradedevelopments in 2012
WTO statistics on short-term tradedevelopments illustrate the divergenttrade performances of major economiesover the course of 2012 Chart 2 showsseasonally-adjusted quarterlymerchandise trade volume indices for the
Chart 2 mdash Quarterly merchandise trade flows of selected economies 2010Q1-2012Q4Seasonally adjusted volume indices 2010Q1=100
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US the EU Japan and developing Asia(including China) Exports from the US andfrom the EU to the rest of the world (ieEU-extra exports) remained relativelystrong for most of the year before dipping
slightly in the fourth quarter (Q4) Asianexports also held up relatively wellfinishing the year on a positive note afterpausing in the third quarter (Q3)
Meanwhile Japanrsquos shipments of goodsdropped 11 in the last two quarters ofthe year This downturn appears to havebeen caused by a deterioration of Japanrsquostrade with China Annual figures onmerchandise trade in dollar terms showthat the value of Japanrsquos exports declinedby 3 in 2012 However shipments to
China which represent around 20 of thecountryrsquos exports were down 11 year-on-year while exports to otherdestinations only declined by 1
On the import side the EU maintained itsrecent downward trajectory with Q4imports from the rest of the world fallingto 5 below their level in the middle of2011 and imports from other EU countries(ie intra-EU trade) slipping by the sameamount
Japanese imports recorded strong growthfor most of the year before dropping 6 inQ4 The rise in imports in the earlierquarters was partly due to increasedpurchases of fuels from abroad for use inconventional thermal electricitygeneration following the loss of outputfrom nuclear power stations after theFukushima disaster The dollar value ofJapanese imports rose 35 in 2012 butimports from Saudi Arabia were up 8 andpurchases from Qatar (mostly natural gas)rose 19 Japanrsquos merchandise trade
deficit of $87 billion for 2012 was thelargest ever recorded for the country in adataset stretching back to 1948
Quarterly developments for trade incommercial services show a similarpattern to trade in goods with year-on-year growth in dollar values flat or
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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tenths of one per cent (ie 02) to $183 trillion leaving it essentiallyunchanged The slower growth in the dollar value of world trade compared totrade in volume terms is explained by falling prices for traded goods Some ofthe biggest price declines were recorded for commodities such as coffee (ndash22) cotton (ndash42) iron ore (ndash23) and coal (ndash21) according to IMF commodity
price statistics
The value of world commercial services exports rose just 2 in 2012 to $43trillion with strong differences in growth rates across countries and regionsFor example the US saw its exports of commercial services climb 4 whilethose of Germany dropped 2 and Francersquos tumbled 7 On the import sideseveral European countries recorded sharp declines including Italy (ndash8)France (ndash10) Portugal (ndash16) and Greece (ndash18)
The trade forecast for 2013 assumes 21 growth in world output at marketexchange rates (unchanged from 2012) based on a consensus of economicforecasters Risks to the forecast are firmly rooted on the downside and aremostly linked to the sovereign debt crisis in Europe
Accelerated fiscal consolidation in the US could also undermine the forecast ifbrinksmanship over budget negotiations between the executive and legislativebranches leads to miscalculation As always unexpected events such asgeopolitical tensions and natural disasters could also intrude to disrupt trade
On a more positive note some factors that held back trade growth in 2012 maysubside in 2013 including the recent territorial dispute that soured traderelations between Japan and China
Indicators of production business sentiment and employment in the firstquarter of 2013 paint a mixed picture of current economic conditions
Purchasing managersrsquo indices suggest that the euro-zone downturn may haveaccelerated despite continued resilience in Germany At the same time the USrecorded a strong rise in manufacturing Japanrsquos production growth was lessnegative and China and the Republic of Korea showed modest improvements
Unemployment in the US recently fell to its lowest level since before theeconomic crisis at 76 whereas the rate for the euro area stands at close to12 Together these indicators point to weak import demand in Europe even asconditions gradually improve elsewhere In light of the large weight of the EU inworld imports (32 in 2012 including trade within the EU 15 excluding it) thissuggests slow growth for trade in the early part of 2013
More details on tradedevelopments in 2012
WTO statistics on short-term tradedevelopments illustrate the divergenttrade performances of major economiesover the course of 2012 Chart 2 showsseasonally-adjusted quarterlymerchandise trade volume indices for the
Chart 2 mdash Quarterly merchandise trade flows of selected economies 2010Q1-2012Q4Seasonally adjusted volume indices 2010Q1=100
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US the EU Japan and developing Asia(including China) Exports from the US andfrom the EU to the rest of the world (ieEU-extra exports) remained relativelystrong for most of the year before dipping
slightly in the fourth quarter (Q4) Asianexports also held up relatively wellfinishing the year on a positive note afterpausing in the third quarter (Q3)
Meanwhile Japanrsquos shipments of goodsdropped 11 in the last two quarters ofthe year This downturn appears to havebeen caused by a deterioration of Japanrsquostrade with China Annual figures onmerchandise trade in dollar terms showthat the value of Japanrsquos exports declinedby 3 in 2012 However shipments to
China which represent around 20 of thecountryrsquos exports were down 11 year-on-year while exports to otherdestinations only declined by 1
On the import side the EU maintained itsrecent downward trajectory with Q4imports from the rest of the world fallingto 5 below their level in the middle of2011 and imports from other EU countries(ie intra-EU trade) slipping by the sameamount
Japanese imports recorded strong growthfor most of the year before dropping 6 inQ4 The rise in imports in the earlierquarters was partly due to increasedpurchases of fuels from abroad for use inconventional thermal electricitygeneration following the loss of outputfrom nuclear power stations after theFukushima disaster The dollar value ofJapanese imports rose 35 in 2012 butimports from Saudi Arabia were up 8 andpurchases from Qatar (mostly natural gas)rose 19 Japanrsquos merchandise trade
deficit of $87 billion for 2012 was thelargest ever recorded for the country in adataset stretching back to 1948
Quarterly developments for trade incommercial services show a similarpattern to trade in goods with year-on-year growth in dollar values flat or
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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US the EU Japan and developing Asia(including China) Exports from the US andfrom the EU to the rest of the world (ieEU-extra exports) remained relativelystrong for most of the year before dipping
slightly in the fourth quarter (Q4) Asianexports also held up relatively wellfinishing the year on a positive note afterpausing in the third quarter (Q3)
Meanwhile Japanrsquos shipments of goodsdropped 11 in the last two quarters ofthe year This downturn appears to havebeen caused by a deterioration of Japanrsquostrade with China Annual figures onmerchandise trade in dollar terms showthat the value of Japanrsquos exports declinedby 3 in 2012 However shipments to
China which represent around 20 of thecountryrsquos exports were down 11 year-on-year while exports to otherdestinations only declined by 1
On the import side the EU maintained itsrecent downward trajectory with Q4imports from the rest of the world fallingto 5 below their level in the middle of2011 and imports from other EU countries(ie intra-EU trade) slipping by the sameamount
Japanese imports recorded strong growthfor most of the year before dropping 6 inQ4 The rise in imports in the earlierquarters was partly due to increasedpurchases of fuels from abroad for use inconventional thermal electricitygeneration following the loss of outputfrom nuclear power stations after theFukushima disaster The dollar value ofJapanese imports rose 35 in 2012 butimports from Saudi Arabia were up 8 andpurchases from Qatar (mostly natural gas)rose 19 Japanrsquos merchandise trade
deficit of $87 billion for 2012 was thelargest ever recorded for the country in adataset stretching back to 1948
Quarterly developments for trade incommercial services show a similarpattern to trade in goods with year-on-year growth in dollar values flat or
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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Source WTO Short-term trade statistics
declining in Europe and growing in other regions For more short-term tradestatistics visits the WTOrsquos statistics portal
The growth of world merchandise trade in 2012 was much lower than one wouldexpect given the rate of world gross domestic product (GDP) growth for theyear Under normal conditions the growth rate for trade is usually aroundtwice that of GDP but in 2012 the ratio of trade growth to GDP growth fell to11 We foresee no change in world GDP growth for 2013 but we do anticipate apartial return toward the usual ratio of trade growth to GDP growth In 2013 itshould increase to 161 and then to 181 in 2014
Despite the unusually slow rate of trade volume growth in 2012 the ratio ofworld exports of merchandise and commercial service to world GDP in currentdollar terms only dipped slightly from around 32 and remained close to itspeak value of 33 in 2008 (Chart 3)
Finally it should be noted that slowing economic growth in Europe has adisproportionate impact on world trade due to the fact that by convention weinclude trade between EU countries in world trade totals However if we wereto treat the EU as a single entity which it is for purposes of trade policy theslowdown in world trade in 2012 would not appear as extreme In this caseworld trade growth would be 32 in 2012 rather than 20
Chart 3 Ratio of world exports of merchandise and commercial services toworld GDP 1980-2012ratio of current $ values
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
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(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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Source IMF world GDP WTO Secretariat for merchandise trade WTO Secretariat and UNCTAD forcommercial services
Additional perspective on the trade forecast
The WTOrsquos forecast of 33 growth in merchandise trade for 2013 is below theaverage rate of 53 for the last 20 years (1992ndash2012) and well below the pre-crisis average rate of 60 (1990ndash2008) (Chart 4) The divergence from the 20-year average narrows in the 2-year-ahead forecast for 2014 (50) but it stillremains below average The difference between the pre-crisis trend andcurrent and projected values for world trade appears to be widening albeit
slowly If our forecast comes to pass the gap in percentage terms will be 170in 2013 and 178 in 2014
At some point in the future trade growth will again surpass its 20 year averageif only because this average keeps falling with every passing year of sub-pargrowth When or if it will manage to bridge the gap with its pre-crisis trendremains to be seen In addition to a durable level shift in the series it appearsthat the fundamental growth rate of world trade volumes has also beenreduced To return to this trend would require a period of very rapid tradeexpansion at some point in the future but such a boom in trade does notappear likely any time soon
Chart 4 Volume of world merchandise exports 1990-2014a
Indices 1990=100
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
7292019 Article as a Follow Up to the Trading System Where I Compared
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
7292019 Article as a Follow Up to the Trading System Where I Compared
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
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a Figures for 2013 and 2014 are projectionsSource WTO Secretariat
The state of the world economy and trade in 2012Economic growthEconomies in the euro area stalled in 2012 and the sovereign debt crisis flaredagain in the summer pushing long-term borrowing costs for Italy and Spainabove 6 and stoking uncertainty about the future of the common currency(Chart 5) Growth also slowed worryingly in the US in Q4 and Japan slipped inand out of recession during the year As a result world GDP growth at market
exchange rates dropped to 21 in 2012 from 24 in 2011 This pace ofexpansion was below the average of 32 for the two decades preceding thefinancial crisis and also below the 28 average of the last 20 years includingthe crisis period (Table 1)
Policy responses from the European Central Bank and the Federal Reserveappear to have succeeded in easing the sovereign debt crisis and putting USgrowth on a firmer footing Borrowing costs in the euro area have returned tomanageable levels since September and joblessness in the US has begun to fallbut progress to date remains fragile
The 23 growth in the US was nearly double the 12 rate for developedeconomies as a whole in 2012 Japanrsquos increase for the year was also above
average at 19 but the EUrsquos growth was close to zero at ndash03
Chart 5 Long-term interest rates on euro area sovereign debt July 2008 mdash February 2013 a
Period average per annum
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 921
a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
7292019 Article as a Follow Up to the Trading System Where I Compared
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
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7292019 Article as a Follow Up to the Trading System Where I Compared
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a Secondary market yields on 10-year government bonds issued by all euro area governments except Estonia Greece and Cyprussorted in descending order by rates in February 2013Source European Central Bank
Developing countries and the Commonwealth of Independent States (CIS)collectively raised their output by 47 in 2012 with Africa recording the
fastest growth of any country or region at 93 China was not far behind at78 while India recorded a 52 increase However the newly industrializedAsian economies of Hong Kong (China) the Republic of Korea Singapore andChinese Taipei registered a disappointing 18 increase as slumping Europeandemand penalized their exports
The next fastest growing region after Africa was Asia (38) followed by the CIS(37) the Middle East (33) South and Central America (26) North America(23) and Europe (ndash01) Aggregate quarterly figures for world GDP growthare not readily available but such growth likely slowed toward the end of theyear as output in the EU contracted in Q4 and US and Japanese growth slowed
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
Table 1 Real GDP and merchandise trade volume growth by region 2010-12Annual change
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1121
Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
7292019 Article as a Follow Up to the Trading System Where I Compared
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
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provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
7292019 Article as a Follow Up to the Trading System Where I Compared
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Includes the Caribbeanb Hong Kong China Republic of Korea Singapore and Chinese Taipeic Hong Kong China Republic of Korea Singapore and Chinese TaipeiSource WTO Secretariat
Merchandise trade in volume (ie real) terms
The volume of world merchandise trade (as measured by the average of exportsand imports) registered an increase of just 2 in 2012 If we exclude years inwhich trade volume declined this was the smallest annual increase in a datasetextending back to 1981 Shipments from developed countries grew more slowlythan the world average at 10 while exports of developing economies grewfaster at 33 On the import side developed economies dropped 01 last yearwhile developing economies grew at a 46 pace (Table 1)
After seeing its exports shrink by 85 in 2011 following the Libyan civil warAfrica rebounded in 2012 to record the fastest export growth of any region at61 This was followed by North America where exports rose 45 on the
strength of a 41 increase the US Asia only managed to increase its exports by28 in 2012 despite 62 growth in Chinarsquos exports Contributing to the slowgrowth in Asia were India and Japan where exports declined by 05 and 10respectively Other regions that export large quantities of natural resources sawsmall increases in export volumes including the Commonwealth of IndependentStates (16) South and Central America (14) and the Middle East (12) Thisis to be expected since quantities of primary products tend not to change verymuch from year to year The region with the slowest export growth was again
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Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
7292019 Article as a Follow Up to the Trading System Where I Compared
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1321
provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
7292019 Article as a Follow Up to the Trading System Where I Compared
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Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
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11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
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7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1121
Europe at 06 but the EU managed to grow even more slowly at 03
Africarsquos imports also grew faster than those of any other region at 113 makingit the only region with double digit growth in either exports or imports This wasfollowed by the Middle East (79) and the Commonwealth of Independent States
(68) which took advantage of the high average oil prices in 2012 to boost theirexport earnings to purchase more imports (Table 2) Asiarsquos import growth of 37was driven by a 36 increase in China North Americarsquos 31 rise was slightlystronger than that of the US (28) South and Central America with importgrowth of 18 lagged behind all regions other than Europe which recorded a19 decline in imports
Table 2 World prices of selected primary products 2000-12Annual change and $Barrel
a Comprising coffee cocoa beans and teab Average of Brent Dubai and West Texas IntermediateSource IMF International Financial Statistics
Merchandise and commercial services trade in value (ie dollar)terms
The dollar value of world merchandise exports in 2012 was $183 trillion nearlyunchanged from 2011 The stagnation in values reduced the average growth ratefor the post-2005 period to 8 from 10 last year This contrasts with thestronger growth rates of 22 in 2010 and 20 in 2011 Meanwhile world
commercial services exports in 2012 were only 2 higher than in 2011 at $43trillion The 2012 growth rate for transport services was in line with total worldcommercial services exports at 2 while travel services grew faster (4) andother commercial services grew more slowly (1) (Table 3)
Commercial services accounted for roughly 19 of total world trade in worldgoods and commercial services in 2012 However it should be noted thattraditional trade statistics which measure gross trade flows rather than valueadded at various stages of production strongly underestimate the contribution
7292019 Article as a Follow Up to the Trading System Where I Compared
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of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1321
provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1421
Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
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a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1221
of services to international trade A joint initiative between the WTO and theOrganisation for Economic Cooperation and Development (OECD) has developednew indicators of trade in value added that provide additional perspective onthe role of services in world trade More information can be found on the WTOrsquoswebsite here wwwwtoorgmiwi
Table 3 World exports of merchandise and commercial services 2005-12$bn and annual change
Source WTO Secretariat estimates for merchandise and WTO and UNCTAD Secretariat estimates for commercial services
Some sub-categories of other commercial services grew faster than othersCommunications (including postal courier and telecommunications services)declined by 3 while construction rose 3 and insurance services increased by2 in 2012 The biggest decline was observed in financial services (ie services
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1321
provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1421
Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1321
provided by banks and other financial intermediaries) which fell 4 The fastestgrowing sub-sector of other commercial services was computer and informationservices which jumped 6 in 2012 Royalties and licence fees fell 2 and otherbusiness services (including engineering services legalaccounting servicesmanagement consulting advertising and trade related services among others)increased by 2
In dollar terms US exports of financial services declined by 4 in 2012 theUnited Kingdom dropped 13 Germany slipped 2 and France plunged 20Several other EU countries also recorded double digit declines in financialservices including Austria (ndash11) Cyprus (ndash21) Greece (ndash29) and Spain (ndash11)Total exports of financial services from Switzerland declined by 8 MeanwhileJapanrsquos exports of financial services gained 13 and Chinarsquos advanced 58Finally the Asian financial centres of Singapore and Hong Kong China treadedwater in 2012 with 0 and 4 growth respectively 1
Overall developed economiesrsquo exports of financial services fell 6 while those ofdeveloping economies and Commonwealth of Independent States together rose3
The US dollar appreciated against most major currencies between 2012 and2013 rising nearly 4 on average according to data from the Federal ReserveBank of St Louis (Chart 6) Exceptions include the Chinese yuan whichappreciated 24 against the dollar and the Japanese yen which was more orless unchanged against the dollar (-02) This would tend to understate thevalue of some trade flows in 2013 and overstate the magnitude of any declinesfrom 2012 particularly for trade not denominated in dollars (eg trade withinthe EU)
Chart 6 Trade weighted US dollar exchange rate against major currenciesJan 2010 mdash Feb 2013Index Jan 2012=100
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1421
Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1421
Source Federal Reserve Bank of St Louis
Appendix tables 1 to 6 provide detailed information on nominal merchandise andcommercial services trade flows by region and for selected economies They alsoinclude tables of leading exporters and importers with and without trade
between EU states There were few significant moves up or down in worldrankings last year France overtook China as an exporter of commercial servicescompared to last yearrsquos tables but this was due to changes in data coveragerather than an improved export performance in France Maps 1 and 2 showshares of regions in world exports and imports of merchandise and commercialservices
Sectoral merchandise trade developments
Chart 7 shows estimated year-on-year growth in the dollar value world trade for
major categories of manufactured goods It illustrates the fact that someproducts declined earlier and recovered sooner than others during the tradecollapse of 2009 In the case of the current trade slowdown it may provide anindication of whether trade is still slowing or has already bottomed out andstarted to recover
Iron and steel trade appears to be a highly pro-cyclical and somewhat laggingindicator of global trade growth It registered the biggest declines of any sectorduring both the 2009 trade collapse and the recent slump Although it was down
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1521
11 year-on-year in the fourth quarter of 2012 this was less negative than theprevious quarter when it was down 13
Year-on-year growth in office and telecom equipment was ndash1 in the secondquarter and 0 in the third but in the fourth it returned to positive territory
with an increase of 6 This sector led the recovery following the 2009 tradecollapse so its return to growth is a positive sign for a revival of trade in thecoming months
Most other sectors saw improvements in year-on-year growth between the thirdand fourth quarters which suggest that a recovery in trade may be under wayChemicals increased from ndash6 to 0 industrial machinery rose from ndash3 to ndash2and clothing and textiles went from ndash8 to ndash1 An important exception isautomotive products which tend to be a coincident indicator of trade cyclesThis category was down 2 in both the third and fourth quarters showing noimprovement
Chart 7 Quarterly world exports of manufactured goods by product 2008Q1-2012Q4Year-on-year change in current $ values
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1621
Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
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7292019 Article as a Follow Up to the Trading System Where I Compared
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Source WTO Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database Global tradeInformation Systems
Prospects for 2013 and 2014
The outlook for world trade and output in 2013 and 2014 looks unsettled aspositive economic trends have also been accompanied by more worrisomedevelopments
EU output fell in the fourth quarter of last year as the slowdown in Europe finallytouched Germany Monthly indicators of economic activity in January andFebruary suggest that the German economy remained relatively resilient in thefirst quarter but the downturn in the rest of the euro area appeared to beintensifying Most forecasters expect European economies to remain weak in thefirst half of 2013 before gaining strength later in the year
Unemployment is falling gradually and private expenditure is picking up in the
US but automatic government spending cuts set to take effect in 2013 couldweigh on growth later in the year Political gridlock may be easing which couldallow more targeted and less sweeping measures to be agreed with less risk to apromising recovery The Federal Reserve has signalled that its most recentprogram of quantitative easing will not be withdrawn hastily but as theeconomy picks up transitioning to a less accommodative policy stance couldprove challenging
Japanrsquos new government has prioritized a sizeable fiscal stimulus package and amore accommodative monetary policy as a way to spur economic growth Theformer may test the limits of fiscal policy given the size of the countryrsquos publicdebt mdash estimated by the IMF to exceed 200 of GDP mdash while the latter mayinvite charges of currency manipulation Stimulus-oriented policies will probably
provide a boost to Japanese growth and trade in 2013 but how much remains tobe seen
Although Chinarsquos exports may be hindered by the slowdown in Europe increasedshipments to the US should partly make up for this Until recently the EU wasChinarsquos largest trading partner but the drop in EU imports in 2012 left it insecond place behind the US Chinarsquos GDP growth is expected to remain strongcompared to the rest of the world in 2013 which should provide support forimports from other countries
In light of these developments WTO economists are forecasting a small pickup inworld trade volume growth to 33 in 2013 from 20 in 2012 Exports ofdeveloped economies should increase by 14 while those of developing
economies (including the Commonwealth of Independent States) should rise53 On the import side the WTO anticipates 14 growth in developedeconomics and 59 in developing economies plus CIS (See Table 4)
Figures for 2014 are provisional estimates based on strong assumptions about themedium-term trajectory of gross domestic product (GDP) and should beinterpreted with care World trade volume growth for that year is expected toimprove to 50 Exports of developed and developing economies should increaseby 26 and 75 respectively On the import side developed economies should
7292019 Article as a Follow Up to the Trading System Where I Compared
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advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1721
advance by 32 while developing economies should rise 74
The current forecast could be derailed if certain downside risks materializeThese include revived financial market turbulence related to the euro crisiscommodity price spikes geopolitical tensions and rising protectionism
Table 4 World merchandise trade and GDP 2008-2014a
Annual change
a Figures for 2012 and 2013 are projectionsb Average of exports and importsSource WTO Secretariat for trade concensus estimates of economic forecasters for GDP
Trade could still surprise on the upside if Europe returns to growth more quicklythan anticipated However the most likely result is very similar to last year amild recession in the EU restraining exports and imports in both developed anddeveloping economies
The trade forecast assumes a 21 increase in world GDP for 2013 with
developed economies growing 11 and the rest of the world growing 50 The2014 projection assumes world output growth of 27 with developed economiesadvancing 19 and the rest of the world growing 51 The output figures aboverefer to real GDP at market exchange rates based on consensus estimates ofeconomic forecasters2
These estimates of export growth are supported by results from of the WTOSecretariatrsquos quarterly time series forecasting model which predicts an increaseof around 25 in imports of goods and services for OECD countries in 2013
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1821
(Chart 8)3 Difference between the two approaches can be explained by the useof different weights in the two models (GDP weights vs trade weights) and bythe fact that the WTOrsquos definition of developed economies differs from themembership of the OECD
Chart 8 GDP and import demand for OECD countries 2008Q1-2012Q4a
Annualized change over previous quarter
a Figures for 2012 and 2013 are projectionsSource OECD for trade and GDP through 2011Q4 Consensus estimates of forecasting agencies for GDPprojections and WTO Secretariat for trade forecasts
Map 1 Merchandise exports and imports in current US dollars by region 2012a
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 1921
a Values and shares include intra-EU tradeSource WTO Secretariat
Map 2 Exports and imports of commercial services in current US dollars by region 2012
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2021
a Values and shares include intra-EU tradeSource WTO and UNCTAD Secretariats
Appendix Table 1World merchandise trade by region and selected economies 2012$bn and
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
7292019 Article as a Follow Up to the Trading System Where I Compared
httpslidepdfcomreaderfullarticle-as-a-follow-up-to-the-trading-system-where-i-compared 2121
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