New Delhi, March 24 India’s hopes of a short-lived global economic slowdown and the attendant contraction of overseas demand for its exports were belied with the World Trade Organisation (WTO) forecasting a drop of 9 per cent or more in global trade in 2009.
In its annual assessment of global trade, scheduled for release in Geneva on Wednesday but released on Tuesday following breach of embargo by several media outlets on Monday, the Geneva-based global trade monitoring body said the collapse in global demand caused by the biggest economic downturn in decades would drive exports down by roughly 9 per cent in volume terms this year, the biggest such contraction since World War II.
“Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies — particularly those in Asia — makes for an unusually bleak 2009 trade assessment,” it said.
In a statement, the Director-General of the WTO, Mr Pascal Lamy, said for the last three decades trade was an ever-increasing part of economic activity, with trade growth often outpacing gains in output. But as demand falls sharply overall, trade would fall even further with the depleted pool of funds available for trade financing further contributing to the significant decline in trade flows, in particular in developing countries, the WTO said.
It said poor nations “are far more dependent on trade for growth than industrialised countries and “as a consequence, many thousands of trade related jobs are being lost”. Mr Lamy warned against protectionism. “In London, G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measures which will render global recovery efforts less effective,” he said. The WTO said when recovery supervenes would be determined by the effectiveness of stimulus plans, which would amount to 3 per cent of total production and reforms to the banking system.
“With the growing share of developing countries’ trade in the global total and increased geographical diversification of these flows, it was assumed that a ‘decoupling’ effect would have made developing countries less vulnerable to economic turmoil in advanced countries but this has not turned out to be the case”, it said.
Merchandise exports
Reviewing last year’s trade performance, it said world merchandise exports in nominal dollar terms rose 15 per cent in 2008 to $15.8 trillion, while exports of commercial services rose 11 per cent to $3.7 trillion. The WTO ascribed the fastest growth of merchandise trade to rising commodity prices during the year, fuelled mainly by the 40 per cent increase in energy costs.
Germany remained the leading exporter in 2008 with shipments worth $1.47 trillion, even as its share in world exports fell to 9.1 per cent form 9.5 per cent in 2007. China was the second largest, with exports of $1.43 trillion and an 8.9 per cent share in world trade. Rounding out the top 5 exporters were the US ($1.3 trillion or 6.9 per cent), Japan fourth ($782 billion or 4.9 per cent) and the Netherlands ($634 billion or 3.9 per cent).
US leads imports
In merchandise imports, the US continued to lead with shipments from the rest of the world worth $2.17 trillion or 13.2 per cent, followed by Germany with a 7.3 per cent share valued at $1.21 trillion, China in third place at $1.13 trillion or 6.9 per cent, Japan in fourth at $762 billion or 4.6 per cent and France in fifth at $708 billion or 4.3 per cent.
As for India, it occupies the 26th slot at $179 billion in merchandise exports in 2008 and accounting for a share of 1.1 per cent in global trade. In imports, India ranks 17th at $292 billion and accounting for 1.8 per cent share in global imports.
A redeeming feature for India is in commercial services exports as it ranks ninth with a 2.8 per cent share in the world total, worth $106 billion, even as the US saw its exports of commercial services rise 10 per cent in 2008 to $522 billion, making it the top exporter with a share of 14 per cent in world trade in services. In 2008, India ranks 12th in import of commercial services at $91 billion and accounting for a share of 2.6 per cent in global trade in commercial services.
Source : Business Line