Growth bounces back… maybe more to come

World trade growth is still below the lev­el of the late 1990s, but the out­look is for high­er growth through this year bq. A 2.5 per cent increase in glob­al out­put in 2003 spurred world trade to recov­er by 4.5 per cent. While this growth was stronger than expect­ed a year ago after the out­break of severe acute res­pi­ra­to­ry syn­drome (SARS) and the build-up of ten­sions in the Mid­dle East, trade and out­put expan­sion in real terms inZ2003 remained below the aver­age rates record­ed since 1995 (“WTO”:

WTO graph of growth in world trade and GDP 1995 - 2003

If trade val­ue growth reach­es 7.5% in 2004, we’ll be back in the same ter­ri­to­ry as the 1990s, thanks in no small mea­sure to growth in China’s trade bq. Chi­nas imports expand­ed by a remark­able 40 per cent in nom­i­nal dol­lar terms (i.e. not adjust­ed for price changes) while its exports expand­ed by 35 per cent, unprece­dent­ed lev­els of expan­sion for a coun­try with such sub­stan­tial trade vol­ume. Devel­op­ing coun­tries as a group con­tin­ue to increase their mer­chan­dise trade sur­plus (exports up by 17% in 2003), but their ser­vices trade (imports + exports) grew at only half the rate of world ser­vices trade. A strong argu­ment in favour of over­due ser­vices trade lib­er­al­iza­tion in devel­op­ing mar­kets.

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