World trade records largest ever annual increase – Report
World trade recorded its largest ever annual increase in 2010 as merchandise exports surged 14.5%, buoyed by a 3.6% recovery in global output as measured by gross domestic product (GDP), says the 2011 World Trade Report.
According to the report, both trade and output grew faster in developing economies than in developed ones.
“Exports in volume terms (i.e. in real terms, accounting for changes in prices and exchange rates) were up 13% in developed economies while the increase for developing economies was nearly 17%,” says the report prepared by the World Trade Organisation (WTO).
The difference between trade of developed and developing economies was even greater on the import side, where developed economies’ imports rose by 11% compared with 18% in the rest of the world, the report noted.
The report attributed the increase in world trade to several factors despite the unusually large 12% drop in world trade in 2009.
The drop in 2009 “may have also helped boost the size of the rebound in 2010, the spread of global supply chains and the product composition of trade compared with output.”
Global supply chains cause goods to cross national boundaries several times during the production process, which raises measured world trade flows compared with earlier decades, it noted.
“The goods that were most affected by the downturn (consumer durables, industrial machinery, etc.) have a larger share in world trade than in world GDP, which increased the magnitude of the trade slump relative to GDP in 2009, and which had a similar positive effect during the recovery of 2010,” the report added.
Higher prices for primary commodities and the extraordinary growth of trade in developing Asia helped boost the combined share of developing economies which the report said “China in particular made an outsized contribution to the recovery of world trade in 2010, as the country’s exports increased by a massive 28% in volume terms and imports swelled by more than 22%.”
Although the growth of world exports in 2010 was the highest on record in a data series going back to 1950, the report said it might have been even higher if trade had quickly reverted to its pre-crisis trend.
Giving the state of the world economy and trade in 2010, the report said world GDP at market exchange rates expanded 3.6% in 2010, one year after an unprecedented contraction of 2.4% that accompanied the financial crisis in 2009.
“Output of developed economies rose 2.6% in 2010 after falling 3.7% in 2009, while the rest of the world (including developing economies and the Commonwealth Independent States) grew 7.0%, up from 2.1% in 2009,” it indicated.
By Ekow Quandzie