Global trade in ‘09 to shrink 9%, biggest fall since WW-II: WTO
The Financial Express, March 25, 2009, P2
Arun S, New Delhi
The prevailing financial crisis, widespread demand slowdown and the consequent recession in many economies will result in global trade contracting by 9% in terms of volume in 2009, the sharpest fall in global trade since the Second World War, World Trade Organisation (WTO) economists have said in their report ‘World Trade 2008, Prospects for 2009.’
The WTO report, released on Monday, comes close on the heels of a similar outlook by International Monetary Fund that predicted a fall of around 3% in world trade this year. Significantly, the WTO has now placed the onus on G20 (leaders of 20 of the world’s leading economies) meeting in London next month to come out with positive solutions to revive shipments.
“Trade can be a potent tool in lifting the world from these economic doldrums. In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure, which will render global recovery efforts less effective,” said WTO director-general Pascal Lamy.
Though, the global demand collapse will equally affect both developed and developing countries, the rich countries are likely to be badly hit with their exports set to fall by 10% this year, according to the WTO economists. Developing countries will see a 2-3% contraction in their shipments as they have become more reliant on trade for growth, the study said.
“Merchandise trade growth in real terms (adjusted to discount changes in prices) slowed significantly in 2008 to 2%, compared to 6% in 2007,” the study said, adding “in dollar terms (which includes price changes and exchange rate fluctuations), world merchandise exports increased by 15% in 2008, to $15.8 trillion, while exports of commercial services rose 11% to $3.7 trillion.” According to Lamy, “The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, particularly in developing countries.”
WTO has singled out China, the most dynamic among emerging economies while showing its concern about the future of global trade. Highlighting that Chinese exports in February were down 26% compared to the same month in the previous year and 28% compared to January. The report said, “If one were to extrapolate this downturn, Chinese exports would be approaching zero within ten months to a year.”
Indian exports too have been contracting since October 2008 and are estimated to fall by 21% in February 2009, its steepest this fiscal. The total exports for this fiscal will fall short of the $200-billion target by at least $30 billion.
Rueing the loss of several thousands of jobs in the trade sector, Lamy warned the governments against enforcing protectionist measures. He said such steps would only lead to “making this bad situation worse” and cause more job losses.
While countries cannot raise tariffs according to the developments at the earlier WTO talks, they are using innovative protectionist measures in the form of non-tariff barriers. Also, investigations into each other’s policies and trade show the general mistrust that is causing complications in the global trading system.
Though the last G20 meeting in November 2008 saw its members promising not to undertake any new protectionist measures, a recent World Bank study showed that 17 of the 20 members had together taken as many as 47 measures that amounted to trade restrictions in one form or the other.
Noting that the use of protectionist measures is on a rise, Lamy said, “The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports.”
Early signs regarding the G20 meeting are hardly inspiring. The recent sherpas meeting of the G20 (or the preliminary meeting of senior government officials of these countries) failed to reach any conclusion or provide guidance to the G20 meeting.
Government sources in India blame it on the unilateral proposals of the US, seeking to protect its own interests and not taking on board the concerns of developing countries.
But several countries around the world are now obsessed with their own stimulus packages to pump-prime their economy and catering to their constituencies instead of taking collective responsibility to perk up global trade, experts said.
Biswajit Dhar, professor and head, centre for WTO studies, Indian Institute of Foreign Trade, said, “The WTO provides a predictable rule-based system. Now is the time for G20 to repose faith in WTO and empower the multilateral body to monitor and ensure that markets remain open and rules are not misused to raise new trade barriers.”
Official sources said keeping with the general mood, the G20 meeting will see India supporting the move for a successful conclusion of the Doha Round talks by the year-end and agreeing not to take any protectionist measures. Also, New Delhi will assure that it will help least developed countries through its duty-free-quota-free market access programme.
India is not going to make any specific demand at the G20 meet due to the General Elections, they added. “But we will be keen on some forward movement on restructuring of the international financial architecture. The developing countries need to have a greater say in IMF and World Bank,” a senior government official told FE.
WTO noted that the problems in the financial markets could prolong the present crisis, adding that the world’s banking sector has to be repaired for an effective recovery. It said international institutions have noted the shortage of trade finance.
In 2008, Germany topped the merchandise goods exporters category with shipments of $1.46 billion (9.1% share of global exports), closely followed by China with $1.42 billion (8.9% of global exports). The US was placed third with $1.3 billion (8.1% of the total) and India was ranked 26 th with $179 billion (1.1% of the global total).
In the list of top services exporters in 2008, India secured ninth place with $106 billion, thereby contributing to 2.8% share in the global exports. With $522 billion, the US was ranked first. China came seventh with exports worth $137 billion comprising 3.7% of the world total.
The Financial Express, March 25, 2009, P2
Arun S, New Delhi
The prevailing financial crisis, widespread demand slowdown and the consequent recession in many economies will result in global trade contracting by 9% in terms of volume in 2009, the sharpest fall in global trade since the Second World War, World Trade Organisation (WTO) economists have said in their report ‘World Trade 2008, Prospects for 2009.’
The WTO report, released on Monday, comes close on the heels of a similar outlook by International Monetary Fund that predicted a fall of around 3% in world trade this year. Significantly, the WTO has now placed the onus on G20 (leaders of 20 of the world’s leading economies) meeting in London next month to come out with positive solutions to revive shipments.
“Trade can be a potent tool in lifting the world from these economic doldrums. In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure, which will render global recovery efforts less effective,” said WTO director-general Pascal Lamy.
Though, the global demand collapse will equally affect both developed and developing countries, the rich countries are likely to be badly hit with their exports set to fall by 10% this year, according to the WTO economists. Developing countries will see a 2-3% contraction in their shipments as they have become more reliant on trade for growth, the study said.
“Merchandise trade growth in real terms (adjusted to discount changes in prices) slowed significantly in 2008 to 2%, compared to 6% in 2007,” the study said, adding “in dollar terms (which includes price changes and exchange rate fluctuations), world merchandise exports increased by 15% in 2008, to $15.8 trillion, while exports of commercial services rose 11% to $3.7 trillion.” According to Lamy, “The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, particularly in developing countries.”
WTO has singled out China, the most dynamic among emerging economies while showing its concern about the future of global trade. Highlighting that Chinese exports in February were down 26% compared to the same month in the previous year and 28% compared to January. The report said, “If one were to extrapolate this downturn, Chinese exports would be approaching zero within ten months to a year.”
Indian exports too have been contracting since October 2008 and are estimated to fall by 21% in February 2009, its steepest this fiscal. The total exports for this fiscal will fall short of the $200-billion target by at least $30 billion.
Rueing the loss of several thousands of jobs in the trade sector, Lamy warned the governments against enforcing protectionist measures. He said such steps would only lead to “making this bad situation worse” and cause more job losses.
While countries cannot raise tariffs according to the developments at the earlier WTO talks, they are using innovative protectionist measures in the form of non-tariff barriers. Also, investigations into each other’s policies and trade show the general mistrust that is causing complications in the global trading system.
Though the last G20 meeting in November 2008 saw its members promising not to undertake any new protectionist measures, a recent World Bank study showed that 17 of the 20 members had together taken as many as 47 measures that amounted to trade restrictions in one form or the other.
Noting that the use of protectionist measures is on a rise, Lamy said, “The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports.”
Early signs regarding the G20 meeting are hardly inspiring. The recent sherpas meeting of the G20 (or the preliminary meeting of senior government officials of these countries) failed to reach any conclusion or provide guidance to the G20 meeting.
Government sources in India blame it on the unilateral proposals of the US, seeking to protect its own interests and not taking on board the concerns of developing countries.
But several countries around the world are now obsessed with their own stimulus packages to pump-prime their economy and catering to their constituencies instead of taking collective responsibility to perk up global trade, experts said.
Biswajit Dhar, professor and head, centre for WTO studies, Indian Institute of Foreign Trade, said, “The WTO provides a predictable rule-based system. Now is the time for G20 to repose faith in WTO and empower the multilateral body to monitor and ensure that markets remain open and rules are not misused to raise new trade barriers.”
Official sources said keeping with the general mood, the G20 meeting will see India supporting the move for a successful conclusion of the Doha Round talks by the year-end and agreeing not to take any protectionist measures. Also, New Delhi will assure that it will help least developed countries through its duty-free-quota-free market access programme.
India is not going to make any specific demand at the G20 meet due to the General Elections, they added. “But we will be keen on some forward movement on restructuring of the international financial architecture. The developing countries need to have a greater say in IMF and World Bank,” a senior government official told FE.
WTO noted that the problems in the financial markets could prolong the present crisis, adding that the world’s banking sector has to be repaired for an effective recovery. It said international institutions have noted the shortage of trade finance.
In 2008, Germany topped the merchandise goods exporters category with shipments of $1.46 billion (9.1% share of global exports), closely followed by China with $1.42 billion (8.9% of global exports). The US was placed third with $1.3 billion (8.1% of the total) and India was ranked 26 th with $179 billion (1.1% of the global total).
In the list of top services exporters in 2008, India secured ninth place with $106 billion, thereby contributing to 2.8% share in the global exports. With $522 billion, the US was ranked first. China came seventh with exports worth $137 billion comprising 3.7% of the world total.
Posts
No comments:
Post a Comment