TRADE: Full Recovery to Be Delayed, Says WTO Report

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, May 2 2002 (IPS) - The World Trade Organisation (WTO) predicts a “moderate recovery” of around one percent for exports by year-end, following the contraction recorded last year.

International trade is not likely to see a strong rebound in 2002, says the annual report released by the Geneva-based WTO Thursday.

This assessment is based on the fact that production increases in most countries will be moderate this year. A similar fate confronts the information technologies (IT) industry.

After nearly two decades of continued expansion, world trade experienced one of its gloomiest years in 2001, with export volumes slipping one percent, according to the WTO report.

The value of global exports last year was six trillion dollars, suffering a four-percent decline with respect to exports in 2000, when they totalled 6.2 trillion dollars.

The contraction of exports, the sharpest since 1982, hurt the three main merchandise groups: agriculture, mining and manufacturing.

Service exports, meanwhile, saw their first decline since 1983, shrinking one percent to 1.4 trillion dollars.

The rise in export value for certain commercial services – such as finance, communications, insurance, royalties and license fees – “was not enough to compensate for the fall in transportation and travel services exports,” says the WTO annual report.

The regions and countries hardest hit by the export contraction of 2001 were those that engage in more IT trade, such as East Asia and the United States.

Singapore and Taiwan, which rely on trade in IT products, saw marked declines in exports and output.

“Developing countries’ merchandise exports decreased by six percent, a somewhat steeper decline than the world average in 2001,” says the WTO document.

The trade organisation’s experts attribute that phenomenon to the sharp contraction of shipments of IT products from East Asia and of exports of oil produced by developing countries.

The exports and imports of the group of least developed countries (LDCs) stagnated in 2001, says the text.

The annual report attributes the “global economic slowdown” to the “bursting of the global IT bubble, the sluggishness of demand in Western Europe, and, to a much lesser extent, the events of Sep 11, 2001.”

The so-called IT bubble, which reflected the ongoing expansion of that sector, led to a decline in related investment.

World sales of semiconductors, a key component of IT products, fell 29 percent last year to 146 billion dollars. The capital earmarked for that sector of the industry also saw a 29-percent decrease.

In 2001, for the first time since 1985, computer sales worldwide shrank. Personal computer shipments last year totalled 128 million units, 4.6 percent less than the previous year.

Trade in mobile telephones, whose sales had doubled in each of the previous two years, saw a three-percent contraction in 2001 to 400 million units.

With respect to the slow productive growth in Western Europe, the WTO attributed it to internal factors, delinking it from the weak global demand and the economic downturn in the United States.

The third leading cause of declining global trade, the Sep 11 attacks in New York and Washington, contributed toward undermining the already weak confidence of business and consumers, says the WTO report.

But the attacks’ most salient impact on trade was felt by the air transportation industry and by tourism that relies on air travel.

The Caribbean countries, where tourism in some cases provides as much as a third of national revenues, suffered abrupt falls in income in the wake of Sep 11.

The WTO study also mentions the considerable price fluctuations in 2001 of commodities, which continue to represent a large portion of developing countries’ exports.

The number of primary products recording a price decrease far exceeded those that saw a price increase, says the annual report.

The sluggishness of global industrial production helped weaken the prices of industrial inputs, particularly of non-ferrous metals.

The price of copper, the most important of the non-ferrous metals exported by developing countries, suffered a record double-digit decline in 2001.

The prices of tropical beverages felt the consequences of a market that experienced wide expansion of the area cultivated and very good harvests, and a demand that did not keep pace with the greater supply.

Coffee prices dropped nearly 30 percent to their lowest levels in three decades, while cotton prices fell by 20 percent, hurting export income for Benin, Chad, Mali and Burkina Faso.

Meanwhile, banana prices jumped nearly 40 percent due to weather conditions and to plant diseases in Ecuador and Central America, two factors that cut production. Cocoa bean prices also saw an increase of around 20 percent.