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WTO NEWS: 2000 PRESS RELEASES

Press/175
6 April 2000
Developing countries merchandise exports in 1999 expanded by 8.5% — about twice as fast as the global average

Developing countries’ merchandise exports in 1999 expanded by 8.5 per cent or about two times faster than the global average. Throughout the 1990s, developing countries’ exports rose faster than world trade, with the exception of 1998. In 1999, the share of developing countries was 27.5 per cent for merchandise exports and 23 per cent for commercial services exports, both being more than 4 percentage points higher than in 1990.


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Among the least-developed countries, merchandise export growth differed sharply again in 1999. Exporters of manufactured goods like Bangladesh, Cambodia and Haiti expanded their exports faster than world trade. Oil exporters, such as Angola and Yemen, benefitted from the oil price hike and increased their exports by more than one third. While, non-fuel commodity exporters, faced with declining commodity prices, tended to record lower export values.

Global commercial services trade accelerated only slightly in 1999, as the recovery in Asia and higher growth in North America were partly offset by lower growth in Western Europe and an import contraction in Latin America and the transition economies.

These are among the findings of the WTO’s preliminary report on trade developments in 1999 and the outlook for this year (full report is attached). Other highlights include the following:

Global output and trade strengthened considerably in the second half of 1999, thereby improving the prospects for higher growth in the current year. The recovery in Asia and continued high demand growth in North America contributed most to global trade expansion last year.

World commodity output in 1999 increased by 1.5 per cent, the same as in 1998. A fall in mining sector output (in particular oil) contrasted with stronger growth in the manufacturing sector (e.g. electronic goods and automobiles). The global output of services industries exceeded commodity output growth. World GDP growth increased from 2 in 1998 to 3 per cent in 1999.

Trade benefitted from the stronger economic activity. Although for the year as a whole merchandise trade expanded in volume terms at the same rate as in 1998 (4.5 per cent), the pace of the expansion in the fourth quarter exceeded the average rate of 6.5 per cent recorded in the nineties.

International capital markets remained buoyant. Global FDI flows surged to a new record level of 800 billion dollars, driven by an exceptionally large value of cross border mergers and acquisitions. The sharp rise in global capital flows was largely concentrated among developed countries. Private net capital flows to emerging markets are estimated to have stagnated in 1999 at about 150 billion dollars.

Nominal and real effective exchange rates recorded major variations, leaving their mark on trade flows. While the euro and most European currencies weakened vis-Ó-vis the US dollar, many East Asian currencies, in particular the Japanese yen, the Korean won and the Thai baht, appreciated markedly.

Average prices of internationally traded goods declined slightly. The weakness of the Euro contributed largely to the fall in Western Europe’s dollar export prices and a decrease in the prices of manufactured goods. Non-fuel commodity prices continued to weaken further, thus affecting the earnings of many raw material exporters. Oil prices, which had fallen sharply in 1998, recovered strongly in 1999 due to a cutback in oil output and an increase in global demand.

World merchandise trade value increased by 3.5 per cent in 1999, faster than commercial services trade. Nevertheless for the 1990-99 period as a whole, commercial services trade still expanded slightly faster than merchandise trade.

Thanks to oil price developments, the highest export value growth of all regions in 1999 was recorded in the Middle East and Africa. However, this strong expansion last year did not fully offset the declines recorded in 1998.

Merchandise imports grew at double-digit rates in North America and Asia, stagnated in Western Europe and Africa and decreased by about 10 per cent in the transition economies and in Latin America (excluding Mexico).

Merchandise export growth among the LDCs differed sharply again in 1999. Oil exporters such as Angola and Yemen benefitted from the oil price hike and increased their exports by more than one-third. Exporters of manufactured goods like Bangladesh, Cambodia, Haiti and Myanmar expanded their exports faster than world trade. Non-fuel commodity exporters faced with declining commodity prices tended to record lower export values.

Developing countries’ merchandise exports expanded by 8.5 per cent or about two times faster than the global average. Throughout the 1990s developing countries’ exports rose faster than world trade, with the exception of 1998. In 1999, the share of developing countries was 27.5 per cent for merchandise exports and 23 per cent for commercial services exports, both being more than 4 percentage points higher than in 1990.

Commercial services trade accelerated only slightly in 1999, as the recovery in Asia and higher growth in North America were partly offset by lower growth in Western Europe, and an import contraction in Latin America and the transition economies.

 
 
World trade developments back to top

Main features

A strengthening of world economic output in 1999 reversed the slowdown of world trade in the first half of 1999 and led to a dynamic expansion of trade in the second half. For the year as a whole, the real growth of world trade remained unchanged from the preceding year and was below the average trade expansion recorded throughout the 1990s. Although trade growth continued to exceed both the growth in world commodity output and world GDP, the excess margin between the growth rates remained smaller in 1999 than those observed during the 1990-1997 period.

 
 
Chart II.1 back to top
Growth in the volume of world merchandise trade and GDP, 1990-99
Annual percentage change

Demand in the United States and the Asian recovery were the motors of the global trade expansion in 1999. The outstanding strength of United States investment and private consumption benefitted not only the NAFTA region, but also sustained the recovery in Asia and to a lesser extent output in Western Europe. A major factor behind the excellent performance of the United States economy and the unprecedented length of the current expansion has been the high level of investment in information technology, the backbone of the “new economy”. Excitement about the growth potential of the new economy has attracted large capital inflows and contributed to an extraordinary boom in the creation and valuation of high-tech companies. While the high rate of investment has increased production capacity and stimulated productivity growth of the United States economy, the question arises for how long high output and demand growth can be sustained without leading to inflationary pressures. A further risk to the strong economic expansion in the United States could arise from the widening of the current account deficit, which points to the increasing role of foreign savings in sustaining United States demand growth. An erosion of investor confidence in the outlook for the United States economy could lead to lower capital inflows and trigger a correction in the dollar rate and the stock markets.

The recovery in Asia was stronger than expected and led to double-digit real import growth in 1999. GDP growth was uneven among the economies in the region, ranging from 11 per cent in the case of the Republic of Korea to stagnation in the case of Indonesia. In many countries economic growth was sustained by fiscal stimulus, replenishment of inventories and a rebound in the global demand for electronic goods. 

 
 
Chart II.2 back to top
Trade contraction and recovery in Asian crisis countries, 1997-99
Percentage change in dollar values over the previous year

The information technology sector and the automobile industry both recorded strong global output growth. Within the information technology sector, the unit sales of personal computers rose by 22 per cent to 114 million units, and the dollar value of global sales of semi-conductors expanded by 18 per cent, to a new record level of 160 billion dollars. One of the most dynamic branches of the global information technology industry in 1999 was mobile phones. It is estimated that world-wide sales of cellular mobile phones reached 283 million units, an increase of two-thirds over 1998 sales. 1 New registrations of passenger cars are estimated to have expanded by 5.5 per cent, lifting the production of passenger cars to a new all time high of 48.6 million units in 1999. 2 Although trade data by product group are still incomplete, there is no doubt that exports of automotive products and of office and telecom equipment have expanded significantly faster than the global average.

Developments in world financial markets continued to influence global trade developments through shifts in the direction of international capital flows and their impact on exchange rate changes. Global FDI flows have surged by about 25 per cent, to some 800 billion dollars.3 FDI inflows in Asia stagnated or rose only marginally, while the United States recorded net FDI inflows of 130 billion dollars.4 The main factor behind the increase in global FDI flows was the exceptional wave of cross-border mergers and acquisitions.

While the United States attracted an unprecedented level of capital inflows, which financed its widening current account deficit, net private capital flows to the major emerging markets are estimated to have stagnated at 150 billion dollars in 1999.5

The increase in the United States current account deficit caused by increased imports can be seen as a positive cyclical element in the world economy as it allows output and employment to be sustained in foreign export industries facing excess capacity. At the same time, the deficit eases inflationary pressures in the United States where labour and productive capital are increasingly scarce. However, what is beneficial in a certain cyclical situation might be difficult to sustain in the medium term.

In particular, a large current account surplus of the developing countries vis-Ó-vis the United States (or any other high income country) is hardly a desirable feature over a longer period. Why is this so when most governments seem to favour a current account surplus over a deficit? A current account surplus implies that net capital (= savings) from the developing countries flows to other countries where it supports investment and/or consumption. A more desirable situation for the developing countries is a current account deficit (and a rising trade volume), and a concurrent inflow of capital that is used to enlarge (profitable) production capacity. If the capital inflow is used primarily for consumption, increased debt and debt servicing costs are unlikely to be sustainable.

The present large net capital inflows into the United States reflect, on the one hand, that foreign investors expect investment returns to be higher in the United States than elsewhere, and on the other, that United States consumers are spending an historically high share of current income (encouraged by its increased financial wealth), while United States companies maintain a high level of capital spending. A reversal in foreign investors’ appreciation of future earnings in the United States or a cutback in United States consumption or investment growth could rapidly change the size of the United States current account deficit, which in 1999 was equivalent to 3.7 per cent of GDP — a historic record level.

Prices of internationally traded goods decreased slightly as the increase in oil prices was offset by a further decrease in the prices of non-fuel commodities and manufactured goods. Among the non-fuel commodities, prices of food and beverages decreased by more than 15 per cent while those of agricultural materials and metals remained roughly unchanged, although they started to strengthen in the second half of 1999. Despite this partial price recovery, the annual average prices of non-fuel commodities fell to a ten year low. The decrease in the dollar price of manufactured goods can be attributed to the fall in prices of office and telecom equipment as well as the strength of the United States dollar vis-Ó-vis the euro and the near absence of inflation in the goods sector of all major economies.

Given that oil prices tripled from 10 dollars per barrel in February 1999 to 30 dollars in the first quarter of 2000, concerns about a resurgence of consumer prices are understandable. However, the marked reduction in the oil intensity of output in the industrial countries — by about 40 per cent since the first oil price hike more than 25 years ago — has reduced this risk considerably. The increased role of natural gas in world fuels trade has also contributed to moderate the increase in import prices of fuels. 6 While the impact of the rebounding oil prices have been small on consumer prices in 1999, the impact was dramatic on the export revenues of the oil exporters. The Middle East recorded export growth in excess of 20 per cent in 1999, but this did not fully offset a corresponding decline in 1998.

 
 
Chart II.3 back to top
Recent Commodity Price Developments,
January 97–January 2000
Indices, January 1997=100

 
 
World trade in 1999 back to top

1. Global trade and output developments

While the negative impact of the financial crisis in Asia and Latin America on output and trade flows were initially underestimated, the more sober projections for 1999 turned out to be too pessimistic. Output of developing countries in Asia rebounded by 6 per cent, Russian GDP recovered by 3 per cent and Brazil’s economy achieved positive growth for the full year of 1999. The United States economy again provided a major stimulus to world trade last year as domestic demand grew by 5.5 per cent. By contrast, the Japanese economy stagnated and Western Europe’s GDP growth decelerated to 2 per cent.

On a sectoral basis, preliminary data suggest that mining output decreased as crude oil production was cut back by 1.5 per cent and agricultural output rose for the second year in a row by only about 1 per cent. Manufacturing output recovered and expanded by about 2.5 per cent. The highly divergent growth rates of regional demand and sectoral output left their mark on global trade flows, which also differed strongly by region and sector.

The value of world merchandise trade rose by 3.5 per cent in 1999 and amounted to 5.45 trillion dollars. Average trade prices decreased for the third year in a row, although the decrease in 1999 was much smaller than in preceding years.

Trade in commercial services rose by 1.5 per cent in 1999 and thereby less rapidly than merchandise trade. Price data for United States commercial services point to a moderate increase in prices for internationally traded services. This implies that the expansion of exports of commercial services has probably also lagged behind merchandise export growth in volume terms.

Table II.1 back to top
World exports of merchandise and commercial services, 1997-99

  Value Annual change
  1999 1997 1998 1999
Merchandise 5,460 3.5 -1.5 3.5
Commercial services 1,340 4.0 0.0 1.5

 
 
2. Merchandise trade back to top

A detailed review of world merchandise trade by product group in 1999 is not yet feasible at the time of writing this report. However, partial information indicates that rebounding oil prices have led to an increase of world fuels exports in excess of 20 per cent. Above average growth was also recorded for office and telecom equipment and automotive products. Primary products, other than fuels, on average experienced price declines in 1999. Taking into account moderate demand growth, the global value of non-fuel primary products has probably stagnated or changed only very little from the preceding year.7

Preliminary data on merchandise trade by region are provided in Tables II.2 and II.3. The large variations in import volumes by region largely reflect the differences in regional demand and output growth. As can be seen from Table II.2, North America and Asia recorded import growth slightly above 10 per cent or two times faster than the global average. While for North America this was the third year in a row in which import growth exceeded 10 per cent, the developments in Asia illustrate the strength of the region’s recovery, which offset the sharp import contraction in the preceding year. While imports of Asia recovered, those of Western Europe recorded a marked deceleration. The transition economies as a group recorded a 10 per cent contraction due to the sharp cut back of imports into Russia and the Ukraine. Imports of Africa and the Middle East changed little in real terms in 1999, also reflecting poor export earnings in recent years.

Table II.2 back to top
Growth in the volume of world merchandise trade by selected region, 1997-99

(Percentage change)

  Exports Imports
  1997

1998

1999

1997

1998

1999

World a

10.5

4.5

4.5

North America

11.0

3.5

4.5

13.0

10.5

10.5

Latin America

11.5

7.5

7.0

22.5

8. 5

-2.0

Mexico

19.5

11.0

13.5

28.0

15.5

15.0

Other Latin America

6.5

5.5

2.0

20.0

4.5

-12.0

Western Europe

9.5

5.5

3.5

9.0

8.5

3.5

European Union (15)

9.5

6.0

3.5

8.5

8.5

4.0

Transition economies

10.5

5.0

-3.0

13.5

5.0

-10.0

Asia

13.0

3.5

6.0

5.5

-8.5

9.0

Japan

12.0

-1.5

2.0

1.5

-5.5

9.5

Asia (5) b

16.5

13.0

11.5

3.0

-22.5

17.5

a Average of export and import growth.
b Indonesia, the Republic of Korea, Malaysia, Philippines and Thailand.
Note: Separate volume data are not available for Africa and the Middle East, although estimates for these regions have been made in order to calculate a world total.

The variation among regional export growth rates in 1999 was smaller than for imports. Despite sharply lower intra-regional trade, Latin America recorded the highest export expansion of all regions. Asian export growth exceeded the global average as Japan’s exports recovered and the five Asian developing countries affected most by the 1997/98 financial crisis achieved double-digit export growth. North America’s exports accelerated somewhat thanks to the dynamic performance of intra-trade. The deceleration of West European economic activity in 1999 led to markedly lower growth of intra-trade. While intra-European Union exports expanded two times faster than world trade in 1998, its growth in 1999 fell below that of world trade. The transition economies and the Middle East both recorded a contraction of their export volume.

Turning to developments in value terms, the Middle East reports the highest regional export growth rate despite its reduction in export volume. Africa’s export growth was, at 8 per cent, the second highest among all regions. This was largely due to the sharp recovery of shipments from the region’s oil-exporting countries. However, it should be recalled that for both Africa and the Middle East, the 1999 rise did not fully offset the decrease recorded in the preceding year. Latin America’s exports rose by a strong 6 per cent, as the higher growth of Mexico’s and some Caribbean countries’ exports more than offset the sharp declines reported for all South American countries. A recovery of intra-Asian trade supported by stronger regional growth and appreciating currencies led Asian exports to regain their pre-crisis peak level. North American exports expanded by 4 per cent in 1999, following a small contraction in 1998. The marginal decline in Western Europe’s export value was due to a deceleration in volume growth but above all, to a fall of nearly 4 per cent in the region’s dollar export prices. The weaker export prices are principally due to the depreciation of the Euro vis-Ó-vis the US dollar. The sluggishness of Western Europe’s import growth, together with the sharp contraction of Russia’s imports, contributed to a further decrease in the export value of transition economies in 1999.

Table II.3 back to top
Growth in the value of world merchandise trade by region, 1997-99
Billion dollars and percentage change

  Exports (f.o.b.) Imports (c.i.f.)
 

Value

Annual percentage change

Value

Annual percentage change

 

1999

1997

1998

1999

1999

1997

1998

1999

World

5,460

3.5

-1.6

3.5

5,725

3.5

-0.8

4.0

North America

934

9.2

-0.7

4.0

1,281

10.3

4.4

11.5

Latin America

292

10.2

-1.2

6.0

329

18.5

4.8

-4.0

Mexico

137

15.0

6.4

16.5

148

22.6

13.9

13.5

Other Latin America

156

7.2

-6.2

-2.0

181

16.4

-0.1

-14.5

Western Europe

2,349

-0.6

3.4

-0.5

2,417

-0.3

5.9

0.5

European Union (15)

2,176

-0.5

3.8

-0.5

2,233

-0.5

6.3

1.0

Extra-EU (15) trade

799

1.8

-0.3

-1.5

851

-0.3

6.2

2.5

Transition economies

212

4.1

-4.6

-1.5

211

6.5

-1.8

-13.0

Central/Eastern Europe

101

6.3

9.5

0.0

129

5.6

10.8

-2.0

Russian Federation

74

-0.4

-15.9

0.0

41

6.7

-19.8

-30.5

Africa

113

1.9

-15.5

8.0

132

5.5

1.2

0.5

South Africa a

27

6.2

-9.0

1.5

27

9.5

-9.3

-8.5

Major fuel exporters b

41

-0.1

-31.4

24.0

30

9.6

-0.8

5.5

Middle East

169

4.7

-22.4

22.0

152

8.1

-3.2

4.0

Asia

1,390

5.4

-6.1

7.5

1,201

0.4

-17.8

10.5

Japan

419

2.4

-7.8

8.0

311

-3.0

-17.2

11.0

China

195

21.0

0.6

6.0

166

2.5

-1.5

18.0

Asia (5) c

371

5.1

-3.5

9.5

292

-3.1

-30.9

15.5

a Beginning 1998, figures refer to South Africa and no longer to the South African Common Customs Area.
b Angola, Algeria, Congo, Gabon, Libyan Arab Yamahiriya and Nigeria.
c Indonesia, the Republic of Korea, Malaysia, Philippines and Thailand.

 
 
3. Commercial services trade
 back to top

The global export value of commercial services recovered in 1999 after stagnating in 1998. Preliminary data by major services categories indicate that all categories recorded positive growth. Transportation services are estimated to have expanded less than the average growth rate of 1.5 per cent despite the increase in fuel costs. Travel services and the residual grouping of Other business services have both expanded by about 2 to 3 per cent.

The commercial services trade data by region shown in Table II.4 indicate that the most dynamic export and import growth in 1999 was in North America and Asia. While North America’s services import growth exceeded its export growth, thereby reducing its traditional surplus in commercial services, Asia’s imports and exports expanded at about the same rate (4-5 per cent). The rebound in Asian services trade is much weaker than for Asian merchandise trade, in particular for exports. In contrast to the developments in North America and Asia, Western Europe’s services trade expanded less favourably in 1999 than in the preceding year. Available data for the transition economies point to a sharp contraction of both services exports and imports.

Table II.4 back to top
Growth in the value of world trade in commercial services by selected region, 1997-99
Billion dollars and percentage change

 

Exports

Imports

 

Value

Annual change

Value

Annual change

 

1999

1997

1998

1999

1999

1997

1998

1999

World

1,340

4

0

2

1,335

3

1

3

North America

284

8

2

5

219

10

6

9

United States

252

9

2

5

182

11

8

10

Latin America

54

7

9

-2

60

13

4

-9

Mexico

12

5

6

-3

14

19

7

9

Other Latin America

42

8

10

-2

47

12

4

-13

Western Europe

630

2

6

0

600

0

7

1

European Union (15)

565

1

5

1

555

0

7

2

Transition economies

47

0

2

-10

44

0

1

-8

Asia

267

5

-15

4

337

2

-11

5

Japan

60

3

-9

-3

114

-5

-9

3

Hong Kong, China

35

1

-10

3

22

5

-2

-2

China

27

19

-2

32

34

-4

Asia (5) a

62

7

-23

3

73

5

-25

5

Note: Separate reliable data are not available for Africa and the Middle East, although estimates for these regions have been made to calculate a world total.

 
 
4. Trade by region and country back to top

The outstanding high investment and consumption growth in the United States resulted in an expansion of imports of goods and services of more than 10 per cent in both nominal and real terms. Over the last two years United States import demand sustained world trade remarkably. Excluding shipments to the United States, the nominal value of world merchandise and services trade in 1999 would have still been below its 1997 level and the volume expansion of world merchandise trade would have been limited to 6 per cent instead of 9 per cent. The share of the United States in world merchandise imports rose to 18 per cent, the highest US share ever. Strong domestic growth was also one reason why United States merchandise exports in real terms lagged behind global trade growth. All countries having strong trade ties with the United States benefitted from this development, and in particular Canada, which expanded its merchandise exports to the United States over the last two years by about 18 per cent, or twice the rate of global trade growth.

Commercial services’ imports of the United States rose by 10 per cent and two times faster than exports. Canada’s import growth of commercial services recovered to 5.5 per cent, but remained for the fifth year in a row behind the expansion of its services exports. Although the expansion of United States commercial services’ imports has exceeded that of exports since 1997, the United States surplus in services in 1999 still amounted to US$68 billion.

In 1999, Latin America recorded its worst annual economic performance for the last decade, as regional output stagnated and the volume of merchandise imports decreased by 2 per cent. At least eight economies recorded lower output in 1999 than in the preceding year. As in 1998, there is a striking difference in output and trade growth between Mexico and all the other Latin American countries combined. While Mexico’s merchandise exports and imports rose over the last two years by more than 20 per cent, other Latin American countries combined reported a fall in exports of nearly 8 per cent and in imports of nearly 15 per cent.

A large part of the divergent performance can be attributed to differences in the export structure. Manufactured goods account for 85 per cent of Mexico’s exports, but only 40 per cent for Latin America excluding Mexico. Manufactures enjoyed more stable prices than non-fuel commodities. In addition, Mexico’s exports are destined largely to the booming North American market (nearly 90 per cent) while the other Latin American countries ship less than 30 per cent of their exports to North America. Mercosur experienced a contraction of its intra-trade by about one quarter, as output of its member countries declined or stagnated.

For commercial services imports, one can observe a similar divergency, as Mexico’s imports rose by 15 per cent, while those of the other Latin American countries contracted by nearly 10 per cent over the last two years. Only for commercial services exports, Mexico reports a stronger decrease than the other Latin American countries in 1999. The somewhat surprising decline reported for Mexico’s commercial services exports is attributed to a decrease in revenues from both travel and other business services.

The slowdown in Western Europe’s output growth to 2 per cent in 1999 contributed to a markedly lower trade growth in volume terms. As more than two-thirds of Western Europe’s trade is intra-regional, weak consumption growth affected both exports and imports. As regards merchandise trade, it is estimated that exports and imports grew in volume terms by about 3.5 per cent and thereby less than world trade. As the Euro and other European currencies weakened vis-Ó-vis the US dollar, the region’s dollar export and import prices decreased on average by about 4 per cent, leading to a stagnation of their trade dollar values in 1999. Austria, France and Sweden were among the West European countries which recorded only moderate import growth, while Norway and Turkey even experienced a contraction of their import volumes in 1999. Spain, Portugal and Ireland, however, continued to be the most dynamic traders in Western Europe, with imports and exports expanding much faster than the European average.

Although output in the transition economies recovered by about 2 per cent, growth remained disappointingly low in the tenth year of transition. Poland is the only country in the region in which the output level in 1999 was above the level attained ten years ago. The sluggishness in Western Europe’s economy together with a dramatic shrinkage of Russian imports depressed the region’s trade in 1999. Merchandise and commercial services trade were both shrinking in dollar value and volume terms. Most of the decline was concentrated in the CIS member countries. Central and Eastern Europe’s merchandise trade slowed down sharply but continued to show positive real growth in 1999. Hungary continued to record the highest trade growth among the Central/East European countries. In 1999, its merchandise exports and imports expanded by about 9 per cent in dollar terms. A major contribution to this strong trade performance was made by the expansion of intra-industry trade in office and telecom equipment and automotive products.

Africa and the Middle East recorded one of their weakest annual GDP growth performances in the 1990s. The rebound in their merchandise exports was largely due to the recovery in oil prices. Africa’s merchandise exports rose by 8 per cent in 1999. The major fuel exporters recorded an increase of about one-quarter, which did not fully offset the decline recorded in 1998. South Africa and other non-fuel exporting African countries recorded an increase in their export earnings of less than 2 per cent. African imports stagnated in dollar terms for the second year in a row, as sharp declines in South Africa’s imports were offset by increases by African developing countries.

Economic growth patterns differed widely in Asia in 1999. While GDP growth in the two most populous countries in the region, China and India, was about 7 per cent, the output in Japan, the largest economy in Asia, stagnated. Among the five Asian countries severely affected by financial crisis, the Republic of Korea recorded an outstanding recovery with double digit growth, while Indonesian output stagnated. Asian developing countries as a group recorded an output expansion of 6 per cent, at least two times faster than any other developing region.

One of the outstanding developments of Asian trade in 1999 was the double digit trade volume growth of the five Asian countries most affected by financial crises in 1997-98. Their export expansion remained very strong (11.5 per cent) and imports rebounded sharply without offsetting fully the contraction of the preceding year. The regional recovery and the cyclical recovery in the electronic goods industry contributed largely to this dynamic growth. For the Republic of Korea and Malaysia, exports of office and telecom equipment accounted for more than 80 per cent of the overall increase of their export value in 1999.

Japan’s merchandise trade recovery was strong, taking into account its stagnating economy. However, export and import values did not regain their pre-crisis peak levels. Japan’s commercial services exports continued to shrink, while imports picked-up after a marked decrease in 1997-98. China’s merchandise imports expanded by 18 per cent while those of Hong Kong, China decreased for the second consecutive year. A notable feature in Asia’s trade is the steady decline of the share of Hong Kong, China in Asia’s merchandise trade. Hong Kong, China’s domestic exports and retained imports had by 1999 fallen below their 1990 level. This decline has to be seen in the context of the relocation of Hong Kong, China’s manufacturing industry to China, which in turn has greatly enhanced its share in world exports. In respect to commercial services, however, Hong Kong, China maintains its position as the leading developing country exporter. For the Asian region, exports of commercial services decreased more strongly in 1998 and recovered by far less in 1999 than did merchandise exports. For imports of commercial services, the recovery in 1999 was also far smaller than for merchandise trade.

Looking at trade performance by country, the following features emerge for 1999 trade developments (see Appendix Tables). First, the United States consolidated its leading position in world merchandise imports and world commercial services exports. Its share in world merchandise imports reached, at 18 per cent, its highest level ever. Second, oil-exporting countries recorded in general the highest export growth in 1999 (at least 16 of them recorded export increases ranging from 15 per cent to 50 per cent). For most of them the increase in 1999 did not fully offset the declines recorded in the preceding year. Third, exporters of office and telecom equipment benefitted from the recovery in the global electronic goods industry. The double digit export growth of the Republic of Korea, Malaysia, the Philippines, Costa Rica and Israel was largely due to office and telecom equipment exports. Fourth, a large number (at least 24) of South American and transition economies recorded double-digit decreases in their imports and often also a fall in their export values. The main causes of these bleak developments include the steep fall of intra-regional trade and the low prices of non-fuel commodities. Fifth, the four largest traders in Western Europe (France, Germany, Italy and the United Kingdom) all recorded a small decline in their merchandise export values and minimal changes in their imports.

 
 
5. Processing trade contributes to exceptional trade expansion in selected developing countries back to top

Over the last fifteen years, the outstanding high trade growth recorded by a selected number of developing countries can be partly attributed to the expansion of their “processing trade”. Beside multilateral and regional trade liberalization, an increasing number of countries have modified their import regime by granting, under certain conditions, duty-free access to those imports which are bound for the processing and assembling of goods destined for exports. This preferential tariff treatment was initially limited to trade which went through specific areas (e.g. the Special Economic Zones in China or the maquiladoras zones in Mexico) but often extended thereafter to companies located outside these specifically designated areas. While the number of export processing zones has risen to about 850, their success in expanding employment and trade is mixed.8 In several countries employment in these zones rose sharply and trade was growing rapidly while in many other countries the creation of special zones granting tariff preferences to processing trade had a negligible impact on both trade and employment. In the 1990’s the most dynamic processing traders among the developing countries are to be found in Asia and Latin America.

A comprehensive appreciation of the contribution of “processing trade” to the expansion of developing countries’ merchandise exports and imports is not attempted here, as the data on processing trade are not as readily available as standard trade statistics. However, the examples given below show that the “processing trade” has gained in importance and often played a crucial part in these countries’ overall trade performance. All the eight countries presented in Chart II.4 have recorded an expansion of exports well ahead of the global average in the last decade. Five of them recorded average annual export growth rates around 15 per cent, which is about three times faster than the global trade expansion of 5.5 per cent.

Chart II.4 back to top
Share of processing trade in total merchandise exports of selected countries, 1990-99
Percentages

Bangladesh: figures refer to fiscal years. Includes only shipments from two export processing zones.
Source: National statistics.

Preferential tariff treatment to “processing trade” is not only a feature of trade regimes in the developing countries. Industrial countries too are often providing duty exemption or reduction on imported goods if these products have been manufactured abroad with materials/components from the importing country. While the value of these imports can be relatively important in bilateral trade flows, their share in total imports is at present rather moderate. For the United States and the European Union the share of imports benefitting from this specific duty exemption amounted to 8 per cent in the US and to 2 per cent in the EU (excluding intra-trade) in 1998.9 In the United States the share of processing trade in total imports declined markedly as trade with Mexico and Canada became increasingly tariff free with the implementation of NAFTA.

Table II-5 back to top
Processing trade and export performance of selected countries, 1990-99
Billion dollars and percentage

Country

Total export growth 1990-1999
(percent)

Share of processing trade 1998
(percent)

Value of processing exports 1998
(billion $)

Dominican Republic a

n.a.

82.2

4.1

Tunisia

5.9

67.4

4.0

China

13.5

56.9

104.6

El Salvador b

16.8

48.6

1.2

Philippines

16.5

40.9

12.1

Mexico

14.4

45.2

53.1

Morocco

6.4

34.7

2.6

Bangladesh c

15.2

13.4

0.7

Memorandum item:      
World total

5.4

a Between 1993 and 1998 exports grew by 9.2% and world exports by 7.7% annually.
b Refers to years 1991-1999.
c Refers to fiscal years.
Source: National statistics

 
 
6. Outlook back to top

Global economic output is expected to accelerate from 3 per cent in 1999 to about 3.5 per cent in 2000. The volume of world merchandise trade growth should reach 6.5 per cent. Higher trade growth is possible, in particular, if the demand in Western Europe and Japan pick up more strongly than currently projected.

In 2000, GDP growth of industrial countries could expand by 3 per cent or one half per cent faster than in 1999 as moderately lower growth in the United States is more than offset by higher growth in Western Europe and Japan. Latin America and the Middle East should see a strong pick-up in their GDP growth after experiencing a stagnation of output in 1999. Higher growth is also projected for the transition and African economies. GDP growth of the Asian developing countries is projected to remain unchanged as the impact of the expansionary fiscal policies and the rebuilding of inventories will be less important in 2000 than in 1999, but offset by a strengthening of fixed investment and private consumption.

More robust growth of the world economy in 2000, together with the carry-over effect due to the trade acceleration in the second half of 1999 is projected to lead to export volume growth of at least 6.5 per cent. Most of this higher growth is expected to come from Western Europe and to a lesser extent from Latin America, the Middle East and the transition economies. North America and the developing countries in Asia, which recorded double digit import growth in 1999, are likely to expand their imports less rapidly in 2000, and the projected deceleration of North America’s final demand should lead to less dynamic import growth in 2000.

The projections above assume that the oil price will recede from its US$30 per barrel level in the first quarter back to a range of US$20 to US$25 and that major financial market turbulence — in particular a sudden sharp correction of stock markets and the dollar rate — can be avoided in the remaining months of the year. A sharp correction of the stock markets, together with a marked slowing down of United States demand and imports, could alter the trade forecast significantly. Note, for example, that at nearly 350 billion dollars, the United States merchandise trade deficit in 1999 exceeded the total imports of Japan. A disruptive adjustment of the current external imbalances would imply a major risk to trade growth in the near future. 

150pxls.gif (76 bytes)
Tables on this page:

World exports of merchandise and commercial services, 1997-99
Growth in the volume of world merchandise trade by selected region, 1997-99
Growth in the value of world merchandise trade by region, 1997-99
Growth in the value of world trade in commercial services by selected region, 1997-99
Processing trade and export performance of selected countries, 1990-99

Appendix tables:

Leading exporters and importers in world merchandise trade, 1999
Leading exporters and importers in world merchandise trade (excluding intra-EU trade), 1999
Leading exporters and importers in world trade in commercial services, 1999

Charts on this page:

Growth in the volume of world merchandise trade and GDP, 1990-99
Trade contraction and recovery in Asian crisis countries, 1997-99
Recent commodity price developments, January 97- January 2000
Share of processing trade in total merchandise exports of selected countries 1990-1999 

Appendices back to top

 
 
Appendix Table 1
Leading exporters and importers in world merchandise trade, 1999
(Billion dollars and percentage)

Exporters

Value

Share

Annual percentage change

Importers

Value

Share

Annual percentage change

     

1998

1999

     

1998

1999

United States

695.0

12.4

-1

2

United States

1059.9

18.0

5

12

Germany

540.5

9.6

6

0

Germany

472.6

8.0

6

0

Japan

419.4

7.5

-8

8

United Kingdom

320.7

5.5

2

2

France

299.0

5.3

5

-2

Japan

310.7

5.3

-17

11

United Kingdom

268.4

4.8

-3

-2

France

286.1

4.9

7

-1

Canada

238.4

4.2

0

11

Canada

220.2

3.7

3

7

Italy

230.8

4.1

1

-5

Italy

216.0

3.7

3

0

Netherlands

204.1

3.6

4

2

Netherlands

188.9

3.2

5

1

China

194.9

3.5

1

6

Hong Kong, China

181.7

3.1

-12

-3

Belgium-
Luxembourg

184.1

3.3

6

3

retained imports a

29.2

0.5

-30

-20

          Belgium-
Luxembourg

169.4

2.9

7

2

                   
Hong Kong, China

174.8

3.1

-7

0

China

165.7

2.8

-1

18

domestic exports

22.2

0.4

-10

-10

Mexico

148.2

2.5

14

13

Korea, Rep. of

144.2

2.6

-3

9

Spain

145.0

2.5

8

9

Mexico

136.7

2.4

6

16

Korea, Rep. of

119.7

2.0

-35

28

Taipei, Chinese

121.6

2.2

-9

10

Taipei, Chinese

111.0

1.9

-8

6

Singapore

114.6

2.0

-12

4

Singapore

111.0

1.9

-23

9

domestic exports

68.6

1.2

-13

8

retained imports a

65.0

1.1

-31

18

Spain

109.4

2.0

5

0

Switzerland

80.1

1.4

5

0

Malaysia

84.5

1.5

-7

15

Australia

69.0

1.2

-2

7

Sweden

84.5

1.5

2

0

Sweden

68.2

1.2

4

0

Switzerland

80.6

1.4

4

2

Austria

67.8

1.2

5

0

Russian Fed. b

74.3

1.3

-16

0

         
                   
Ireland

69.6

1.2

20

8

Malaysia

65.5

1.1

-26

12

Austria

62.0

1.1

7

-1

Brazil

51.8

0.9

-7

-15

Thailand

58.4

1.0

-5

7

Thailand

50.6

0.9

-32

18

Australia

56.1

1.0

-11

0

Ireland

45.6

0.8

14

2

Saudi Arabia

50.5

0.9

-35

27

Poland

44.8

0.8

11

-5

Indonesia

48.5

0.9

-9

-1

India

44.6

0.8

3

4

Brazil

48.0

0.9

-4

-6

Denmark

43.3

0.7

4

-6

Denmark

47.8

0.9

-1

-1

Russian Fed. b

41.1

0.7

-20

-30

Norway

44.9

0.8

-18

13

Turkey

39.2

0.7

-5

-15

Finland

41.5

0.7

6

-4

Portugal

37.6

0.6

5

2

                   
Total of above c

4,927.0

87.8

-

-

Total of above c

4,976.0

84.7

-

-

World c

5,610.0

100.0

-2

3

World c

5,875.0

100.0

-1

4

a Retained imports are defined as imports less re-exports.
b Includes trade with the Baltic States and the CIS.
c Includes significant re-exports or imports for re-export.

 
 
Appendix Table 2 back to top
Leading exporters and importers in world merchandise trade (excluding intra-EU trade), 1999
(Billion dollars and percentage)

Exporters

Value

Share

Annual percentage change

Importers

Value

Share

Annual percentage change

     

1998

1999

     

1998

1999

European Union(15)

798.6

18.9

0

-1

United States

1059.9

23.6

5

12

United States

695.0

16.4

-1

2

European Union (15)

851.2

18.9

6

3

Japan

419.4

9.9

-8

8

Japan

310.7

6.9

-17

11

Canada

238.4

5.6

0

11

Canada

220.2

4.9

3

7

China

194.9

4.6

1

6

Hong Kong, China

181.7

4.0

-12

-3

Hong Kong, China

174.8

4.1

-7

0

retained imports a

29.2

0.6

-30

-20

domestic exports

22.2

0.5

-10

-10

China

165.7

3.7

-1

18

Korea, Rep. of

144.2

3.4

-3

9

Mexico

148.2

3.3

14

13

Mexico

136.7

3.2

6

16

Korea, Rep. of

119.7

2.7

-35

28

Taipei, Chinese

121.6

2.9

-9

10

Taipei, Chinese

111.0

2.5

-8

6

Singapore

114.6

2.7

-12

4

Singapore

111.0

2.5

-23

9

domestic exports

68.6

1.6

-13

8

retained imports a

65.0

1.4

-31

18

                   
Malaysia

84.5

2.0

-7

15

Switzerland

80.1

1.8

5

0

Switzerland

80.6

1.9

4

2

Australia

69.0

1.5

-2

7

Russian Fed. b

74.3

1.8

-16

0

Malaysia

65.5

1.5

-35

12

Thailand

58.4

1.4

-5

7

Brazil

51.8

1.2

-7

-15

Australia

56.1

1.3

-11

0

Thailand

50.6

1.1

-32

18

Saudi Arabia

50.5

1.2

-35

27

Poland

44.8

1.0

11

-5

Indonesia

48.5

1.1

-9

-1

India

44.6

1.0

3

4

Brazil

48.0

1.1

-4

-6

Russian Fed. b

41.1

0.9

-20

-30

Norway

44.9

1.1

-18

13

Turkey

39.2

0.9

-5

-15

India

36.5

0.9

-4

9

Norway

33.8

0.8

1

-7

                   
Philippines

35.0

0.8

18

19

Israel

33.2

0.7

-5

13

United Arab Emirates

29.5

0.7

-13

15

Philippines

32.6

0.7

-18

4

Czech Rep.

26.8

0.6

16

2

Saudi Arabia

30.0

0.7

4

0

Poland

26.8

0.6

10

-5

United Arab Emirates

28.9

0.6

-9

6

South Africa c

26.7

0.6

-9

1

Czech Rep. d

28.9

0.6

6

0

Turkey

26.2

0.6

3

-3

Hungary

27.7

0.6

21

8

Israel

25.3

0.6

2

10

South Africa c

26.8

0.6

-9

-8

Hungary

24.6

0.6

20

7

Argentina

25.5

0.6

3

-19

Argentina

23.3

0.6

0

-12

Indonesia

23.9

0.5

-34

-13

Venezuela

18.9

0.4

-21

10

Egypt

16.2

0.4

22

0

                   
Total of above e

3,884.0

91.8

-

-

Total of above e

4,073.0

90.7

-

-

World
(excl. intra-EU trade) e

4,232.0

100.0

-4

4

World
(excl. intra-EU trade) e

4,494.0

100.0

-3

5

a Retained imports are defined as imports less re-exports.
b Includes trade with the Baltic States and the CIS.
c Beginning 1998, figures refer to South Africa and no longer to the South African Common Customs Area.
d Imports are valued f.o.b.
e Includes significant re-exports or imports for re-export.

 
 
Appendix Table 3 back to top
Leading exporters and importers in world trade in commercial services, 1999
(Billion dollars and percentage)

Exporters

Value

Share

Annual percentage change

Importers

Value

Share

Annual percentage change

     

1998

1999

     

1998

1999

United States

251.7

18.8

2

5

United States

182.3

13.7

8

10

United Kingdom

101.4

7.6

7

2

Germany

127.2

9.5

3

2

France

79.3

5.9

5

-6

Japan

113.9

8.5

-9

3

Germany

76.8

5.7

3

-3

United Kingdom

81.4

6.1

11

4

Italy

64.5

4.8

0

-3

Italy

62.7

4.7

7

0

Japan

59.8

4.5

-9

-3

France

59.2

4.4

5

-9

Spain

54.1

4.0

12

11

Netherlands

46.5

3.5

4

0

Netherlands

53.1

4.0

3

3

Canada

37.1

2.8

-4

5

Belgium-
Luxembourg

37.6

2.8

6

4

Belgium-
Luxembourg

35.5

2.6

8

4

Hong Kong, China

35.4

2.6

-10

3

China

32.1

2.4

-4

                   
Austria

32.6

2.4

9

3

Spain

30.9

2.3

13

12

Canada

32.4

2.4

2

7

Austria

29.5

2.2

6

-2

Switzerland

27.2

2.0

5

5

Korea, Rep. of

26.7

2.0

-19

14

China

26.6

2.0

-2

Ireland

23.5

1.8

32

18

Korea, Rep. of

25.0

1.9

-6

5

Taipei, Chinese

23.2

1.7

-4

0

Singapore

22.9

1.7

-40

25

Sweden

22.8

1.7

11

5

Sweden

18.0

1.3

1

2

Hong Kong, China

22.4

1.7

-2

-2

Australia

17.2

1.3

-13

9

Singapore

19.3

1.4

-7

8

Denmark

16.0

1.2

6

8

Australia

18.0

1.3

-8

6

Turkey

16.0

1.2

21

-31

India

17.3

1.3

16

22

                   
Taipei, Chinese

14.8

1.1

-2

-11

Denmark

16.2

1.2

13

5

Thailand

14.1

1.1

-16

8

Switzerland

15.7

1.2

8

3

Norway

13.7

1.0

-3

-2

Norway

15.4

1.2

4

2

India

13.2

1.0

24

19

Thailand

13.9

1.0

-31

17

Mexico

11.6

0.9

6

-3

Mexico

13.7

1.0

7

9

Malaysia

10.8

0.8

-24

Malaysia

13.0

1.0

-24

Greece

10.5

0.8

6

Indonesia

12.7

0.9

-28

8

Israel

10.3

0.8

8

14

Russian Fed.

11.7

0.9

-14

-27

Poland

9.8

0.7

21

-10

Brazil

11.6

0.9

9

-26

Russian Fed.

9.7

0.7

-9

-25

Israel

10.7

0.8

5

12

                   
Total of above

1,165.0

87.1

-

-

Total of above

1,145.0

85.9

-

-

World

1,340.0

100.0

0.0

1.5

World

1,335.0

100.0

0.5

2.5

  back to top