World Trade Analysis 2013 and Projections
According to the WTO World Trade Organisation, world trade is expected to grow by a modest 4.7 % in 2014 and 5.3 % in 2015
The forecast of 2014 of 4.7 % is more than double the 2.1 % increase in 2013, but remaining below the 20-year average of 5.3 %. For the past two years average growth was earmarked only 2.2 %.
The volume of world merchandise exports and GDP Gross Domestic Product 2005 -15 may be had from Table 1
WTO gives several factors contributing to the weakness of trade and output in 2013, including the lingering impact of the EU recession, high unemployment in the Euro Area economies – there Germany is a notable exception – and uncertainty about the timing of the Federal Reserve’s winding down of its monetary stimulus in the U.S. The latter contributed to financial volatility in developing economies in the second half of 2013, particularly in certain “emerging” economies with large current account imbalances.
Preliminary estimate of 2.1 % for world trade growth in 2013 is based on the average merchandise exports and imports in volume terms, adjusted for differences in inflation and exchange rates across countries. This figure is slightly lower than the WTO’s most recent forecast (September 2013) of 2.5 % for 2013. However, for the second consecutive year, world trade grew in line as the world GDP at market exchange rates, rather than twice as fast, as is normally the case.
Recent business surveys and industrial production data point to a firming up of the recovery in the U.S. and Europe in early 2014. The gradual improvement of U.S. employment data has allowed the Federal Reserve to proceed with its planned “tapering”, of their third round of quantitative easing (QE3). The outlook for the EU has as also improved, but growth rate there will remain uneven as long as peripheral EU economies continue to underperform core ones. Output growth in Japan should be slightly lower this year because of planned fiscal consolidation is implemented.
Finally, despite having hit a soft patch recently, developing economies (including China) should continue to outpace developed economies in terms of GDP and trade growth in the coming year, however some could encounter setbacks, particularly those exposed to the recalibration of monetary policy in developed countries.
In 2013, the dollar value of world merchandise amounted to USD 18.8 trillion or plus 2.1 (2.4) %. This implies that export prices declined slightly from one year to the next. The value of world commercial service exports increased 5.5 % to USD 4.6 trillion.
WTO’s trade forecast for 2014 is based on an assumption of 3.0 % growth in world GDP growth (consensus, not WTO projections) at market exchange rates, while the forecast for 2015 assumes an output growth of 3. 1 %. ) Risks to the trade forecast are still mostly on the downside, but there is some upside potential, particularly since trade in developed economies is starting from a low base. However, volatility is likely to be a defining feature of 2014 as monetary policy in developed economies becomes less accommodative.
Table 2 gives the moving average of World trade, GDP and trade/GDP 1990 – 2015 (including forecast 2014-15)
Some developed economy risks factors have receded considerably since last year, including the sovereign debt crisis in Europe and fiscal brinksmanship between the executive and legislative branches of government in the U.S. Developing economies are now in the focus of several gathering risks, including large current account deficits, for instance in India and Turkey, currency crises (Argentina), overinvestment in productive capacity, and rebalancing economies to rely more on domestic consumption (China) and less on external demand.
Geopolitical risks have introduced an additional element of uncertainty to the WTO forecast. Civil conflicts and territorial disputes in the Middle East, Asia and Eastern Europe could provoke higher energy prices and disrupt trade flows if they escalate. However, since the timing and impact of these kinds of risks are inherently unpredictable, they are not considered directly in the WTO forecasts.
Table 3 presents the quarterly merchandise trade flows of selected economies of the first quarter 2010 – fourth quarter 2013. The chart shows exports and imports and these are self explanatory.
Table 4 presents the volume of world merchandise exports 1990-2015
Another interesting chart represents Table 5 showing the USD exchange rates against currencies of selected countries January 2005 to March 2014.
Table 6 shows GDP growth and merchandise trade by region 2011-13
World merchandise trade volume as measured by the average of exports and imports grew, as stated previously by 2.1 % in 2013, but the difference between measured exports and imports was relatively large, namely 2.4 % for exports, 1.8 % for imports.
Exports of developed economies grew more slowly than the world average at 1.5 %, while shipments from developing countries grew faster than average at 3.3 %. On the import side, developed economies recorded a small decline of 0.2 %, while developing economies and CIS increased by 4.4 % as can be witnessed by Table 6.
Asia’s exports grew with 4.6 % faster than any other region in 2013. It was followed by North America (2.8 %), Europe and the Middle East, each +1.5 %, South and Central America and CIS, the Commonwealth of Independent States, each +0.7 % and Africa (-3.4 %). Asia’s export growth was held back by Japan, which saw its shipments to the rest of the world decline by 1.8 %.
Meanwhile, exports of China (7.7 %) and India (6.7 %) increased. These performances was better than 2012 but still relatively weak by recent historical standards. The negative figure for Africa was due to sharp reductions in shipments form petroleum exporting countries, including Libya (-27 %), Nigeria (-11 %) and Algeria (-7%). TextileFuture wishes to add that the prospects for Africa in 2014-15 and in view to economic and trade development are more positive.
Turning to imports, the fastest growing region was Asia and the Middle East with each 4.4 %, Arica with 4.0 %, South and Central America with 2.5 % and North America with 1.2 %, where as declines have to be noted in Europe (-0.5 %), CIS region (-1.1 %), India (-2.0 % because of economic slowdown). On the other hand, China’s imports jumped almost 10 %.
Arica was able to increase its imports even as its exports fell during 2013 due to continued high primary commodity prices. Although prices for metals, raw materials and beverages (including coffee, tea, cocoa) have fallen in the last two years, oil prices have been remarkably steady, rising one percent in 2012 and falling 2 % in 2013. However primary commodity prices in general only fell 2 % in 2013.
Some figures on merchandise trade in value terms
The total volume of world merchandise exports in 2013 was USD 18.8 trillion (+ 2.0 %). The growth of world merchandise exports in current dollar terms was nearly equal to the growth of exports in volume terms since prices of traded goods as measured by unit values were nearly unchanged as against 2012. The average growth rate of export values in the post 2005 period remained with 8 % stable. 2013 was the fact that China became the largest trader as measured by the sum of exports and imports and is representing 11 % of the world, overtaking the U.S. (10.4 % share). However, if the EU is treated as a single entity its share in world exports plus imports, excluding intra-EU trade remains the largest with 15.1 % share, compared to China’s 13.8 %.
North America’s merchandise exports rose 1.9 % to USD 2.42 trillion (share of world exports amounts to 12.9 %), while imports remained essentially unchanged at USD 3.20 trillion (16.9 % share of imports). South and Central America’s exports fell by 1.8 % to USD 737 billion (3.9 %) but the region’s imports grew by 2.4 % to USD 773 billion (4.1 %), European exports rose 4.0 % to USD 6.64 trillion (35.3 %), the strongest growth of any region, whereas Europe’s imports recorded as small increase of 1.0 % to USD 6.59 trillion (34.9 %).
CIS exports declined 2.8 % to USD 778 billion while imports grew by 0.7 % to575 billion. Respectively, the region’s exports represented 4.1 % and imports 3.0 % of world trade.
Africa’s exports suffered a large decline of 6.3 % to USD 599 billion (3.2 % of world exports), but imports grew a modest 2.2 % to USD 628 billion (3.3 % of worlds imports). Middle East exports declined by 1.3 % to USD 1.33 trillion (7.1 %) and the region’s imports increased by 4.3 % to USD 770 billon (4.1 %)
Asia’s exports grew by 2.8 % to USD 6.29 trillion (33.5 of the global total in 2013), whereas imports grew by 2.1 % to USD 6.37 trillion (33.6 %)
The top five merchandise exporters in 2013 were China (USD 2.21 trillion, 11.8 % of world exports), the U.S.A. with 1.58 trillion, 8,4 % world’s share, Germany (1.45 trillion, 7.7 %), Japan USD 715 billion, 3.8 %) and the Netherlands (USD 664 billion, 3.6 %).
If we count all 28 EU members as a single entity and exclude intra-EU trade, the leading exporters were the EU (2.30 trillion, 15.3 % share of world imports), followed by China (14.7 %), the U.S. (10.5 %, Japan (4.8 %) and the Republic of Korea (USD 560 billion, 3.7 %)-
The lading importers were the U.S. (USD 2.33 trillion, 12.4 % of world imports), China (USD1.95 trillion, 10.3 %) , Germany (USSD 1.19 trillion, 6.3 %), Japan (USD 833 billion, 4.4 %) and France (USD 681 billion, 3.6 %). France has replaced Great Britain at number five on the list of leading importers.
Table 7 offers the quarterly world exports of manufactured goods by product 2008 first quarter to 2013 fourth quarter in USD value and % of change, where also the values of textiles and clothing can be had (more details are not available yet)
Some figures on service trade
Commercial services exports reached 2013 USD 4.6 trillion, the growth rate was 6 %. The 2013 growth rate for transport services was below world commercial services exports at 2 %, while travel services grew at 7 % and other commercial services grew at 6 %. Such services accounted for 20 % of total world trade in goods and commercial services in 2013, up one percent against 2012.
In USD terms, China’s exports of financial services rose 52 % to USD 3 billion in 2013, although the U.S. remained the top supplier with exports valued at USD 82 billion. Other notable changes include China’s displacing of France to become the fourth largest exporter of other business services.
Table 8 shows the development of world exports of merchandise and commercial services 2005-13 in (USD billion and in % of annual change)