WTO Predicts Slowdown In Trade Growth for 2008

The chart above depicts annual GDP growth vis-a-vis goods export growth between 1997 and 2007. With the exception of 2001, annual trade growth has been a given. Still, the example of 2001 is illustrative of what may happen in 2008. As the world economy slows--but perhaps not to a similar 2001-style crawl--exports may be hit as well. While I cannot easily provide evidence offhand, I'd think that security concerns in the wake of 9/11 may have affected the free flow of goods that year. Then again, less than four months' worth of exports would have been affected, so it's more than likely that the economic slowdown played the lion's share in making export growth negative in 2001.

Certainly, China joining the WTO on November 11, 2001 also has considerable bearing on the changes wrought in the world economy since. Anyway, the chart above is just one of many you'll find in the WTO's latest press release on the prospects for trade growth in 2008. Perhaps unsurprisingly, the organization predicts trade growth will slow--but not by much to 4.5% in 2008. While developed countries will take it on the chin in terms of trade volumes, LDCs look set to go along their merry way. In any event, it's hardly a scenario for "deglobalization":

World trade growth slid to 5.5% last year from 8.5% in 2006 and may grow even more slowly in 2008 — at about 4.5% — as sharp economic deceleration in key developed countries is only partly offset by continuing strong growth in emerging economies, according to World Trade Organization economists.

WTO economists cautioned that their preliminary assessment of 2007 trade figures and forecasts for this year have been unusually difficult to gauge due to the uncertainty caused by sharp market fluctuations…

Developing economies and the Commonwealth of Independent States (CIS) region ¹, however, maintained or strengthened their expansion of output, contributing more than 40% of world output growth in 2007. Developing countries’ share of world merchandise trade (exports plus imports) reached a new record level of 34% in 2007. These two groups of countries are expected to record faster growth in imports than exports; together they are expected to contribute more than one half of global import growth in 2008.

The sharp rise of commodity prices — particularly fuels and metals — greatly improved the financial situation of most developing regions and boosted imports. But, higher energy and food prices translated into inflationary pressures worldwide…

Lower import growth [in 2007] than in the preceding year was observed in North America, Europe, Japan and the net oil importing developing countries in Asia. This downward trend outweighed the higher import growth observed in Central and South America, the CIS, Africa and the Middle East. It is estimated that the developing countries as a group accounted for more than one half of the increase in world merchandise imports in 2007.

Among the leading traders, China’s (real) merchandise trade expansion remained outstandingly strong in 2007 as lower export growth to the US and Japanese markets was largely offset by higher export growth to Europe and a boom in shipments to the net-oil-exporting regions. Despite a booming domestic economy, weaker demand in some of China’s major export markets and a moderate real effective appreciation of the yuan, import growth continued to lag behind export growth.