Academic journal article Global Economic Observer

World Merchandise Trade

Academic journal article Global Economic Observer

World Merchandise Trade

Article excerpt

1.The volume of world merchandise trade

The volume of world trade continued to grow slowly in 2015 recording a growth of 2.7 per cent, measured by the average of exports and imports (the volume of exports grew by 3%, while the volume of imports grew by 2,4%, , as illustrated by Chart 2.). Slow global trade growth was accompanied by a modest increase in world GDP, which grew 2.4 per cent in real terms at market exchange rates in the same period.

Several factors contributed to the lackluster performance, including economic slowdown in China, recessions in other large developing economies including Brazil, falling prices for oil and other primary commodities, strong fluctuations in exchange rates, and financial volatility driven by divergent monetary policies in developed countries. Faster economic growth and rising import demand in developed countries (in Europe and North America) partly made up for weaker demand elsewhere, leaving trade growth and output growth nearly unchanged compared with the previous year (2.8 per cent and 2.5 per cent, respectively, in 2014). Meanwhile, output slowed in China and contracted in Japan. China's economy slowed further in the first quarter of 2016. Growth also eased in the United States in the first quarter of 2016 but accelerated in the euro area. Japan's GDP continued to alternate between positive and negative growth.

2015 marked the fourth consecutive year with trade volume growth below 3 per cent, and the fourth year in a row with world trade growing at nearly the same rate as world GDP. Growth rates for trade and GDP in 2015 remained below their respective averages since 1990 of 5 per cent and 2.7 per cent. The recent slow in trade growth is unusual but not unprecedented, as for example the world trade growth was weaker between 1980 and 1985, when five out of six years saw trade growth below 3 per cent, including two years of outright contraction.

As for the contributions to world trade volume growth by regions, Asia contributed more than any other region to the recovery of world trade after the financial crisis of 2008-09. However, the region's impact on global import demand declined in 2015 as China and other Asian economies cooled. in 2015 the region contributed just 0.6 percentage points to the global increase of 2.4 per cent, or 25 per cent of world import growth.

In contrast to Asia, Europe mostly weighed down world trade growth since the financial crisis, making a negative contribution to global import growth in 2012 and 2013. However, by 2015 Europe's contribution was again largely positive, accounting for 1.5 percentage points of the 2.4 per cent increase in world import volume for the year, or 64 per cent of global trade growth.

North America made a positive contribution to world import growth in 2015 (1.1 per cent), while negative contributions were recorded in 2015 for South and Central America (-0.2 per cent) and other regions including Africa, the Middle East and the Commonwealth of Independent States (-0.6 per cent).

On the supply side, "factory Asia" did more than any other region to lift merchandise export volume growth between 2011 and 2014, but its contribution fell below that of Europe in 2015. Asia was responsible for 1 percentage point of the 3.0 per cent rise in world merchandise exports (35 per cent of export growth).

Europe's 1.3 percentage point contribution accounted for 44 per cent of the rise, thanks in part

to a reactivation of trade within the European Union. North America's contribution to export growth in volume terms was close to zero in 2015 as demand for US goods slowed in Canada, Asia and South and Central America

A product breakdown of world trade in dollar value (as in volume terms is not available), shows us that fuels and mining products were responsible for more than half of the plunge in trade values in 2015, but that slowing trade in manufactured goods and agricultural products also contributed significantly to the overall decline. …

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