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”:http://www.wto.org/english/news_e/pres04_e/pr373_e.htm)



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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