LAHORE – Following the record-breaking 14.5 percent surge in the volume of exports in 2010; world trade growth should settle to a more modest 6.5 percent expansion in 2011. The sharp rise in trade volumes last year enabled world trade to recover to its pre-crisis level, but not its long-term trend and WTO economists believe a recent series of important events around the world lend to a greater degree of uncertainty to any forecast.
“The figures show how trade has helped the world escape recession in 2010,” WTO Director-General Pascal Lamy said. “However, the hangover from the financial crisis is still with us. High unemployment in developed economies and sharp belt-tightening in Europe will keep fuelling protectionist pressures. WTO Members must continue to be vigilant and resist these pressures and to work toward opening markets rather than closing them. Stability should be the name of the game for 2011”.
The 14.5 percent rise was the largest annual figure in the present data series which began in 1950 and was buoyed by a 3.6 percent recovery in global output. It was a rebound from the 12 percent slump in 2009, returning trade to the 2008 peak level and to more normal rates of expansion. Nevertheless, the financial crisis and global recession continue to have an impact, they said.
For 2011, the economists are forecasting a more modest 6.5 percent increase, but with uncertainty about the impact of a number of recent events, including the earthquake and tsunami in Japan. If achieved, this would be higher than the 6.0 percent average yearly increase between 1990 and 2008.
Figures refer to growth in the volume of world trade, i.e., trade in real terms, adjusted for changes in prices and exchange rates. The projection is based on a consensus estimate of global output growth by economic forecasters, who predict a GDP growth rate of 3.1 percent in 2011 at market exchange rates. The factors that contributed to the unusually large drop in world trade in 2009 may have also helped boost the size of the rebound in 2010.
These include the spread of global supply chains and the product composition of trade compared to output. Global supply chains cause goods to cross national boundaries several times during the production process, which raises measured world trade flows compared to earlier decades.
The quantification of this effect would require data on trade in value added that are not currently available.
