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world_trade_2009-10[1]

world_trade_2009-10[1]

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Published by Bhavana Mannava
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Published by: Bhavana Mannava on May 04, 2013
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world Trade reporT 2010
18
 
I
 
The trade situationin 2009-10
The economic and nancial crisis that shook the world economy in the closing months of2008 produced a global recession in 2009 thatresulted in the largest decline in world trade inmore than 70 years. The rate of trade growthhad already slowed from 6.4 per cent in 2007 to 2.1 per cent in 2008, but the 12.2 per centcontraction in 2009 was without precedent inrecent history. The WTO has projected amodest recovery in 2010 which should reversesome of the impact of the trade collapse.
 
I - H RAD IAI I 2009-10
19
 
Cntnts
A Introduction 20B verview of output and price developments in 2009-10 22erchandise trade, volume (real) terms, 2009 24D erchandise and services trade, value (nominal) terms, 2009 26
 
world Trade reporT 2010
20
Tradeandoutputgrowthresumedinthesecondhalo2009ollowingrecorddeclinesearlierintheyear.Therecoverythroughtherstquartero2010wasinsucienttoattainpre-crisislevels.TheWTOhasprojectedaurtherrecoveryin2010romthedepressedlevelso2009,whichshouldreversesomebutnotallotheimpactothetradecollapse.Onepositivedevelopmentin2009wastheabsenceoanymajorincreaseintradebarriersimposedbyWTOmembersinresponsetothecrisis,despitehighunemploymentinmanycountries.TheWTOsystemotraderegulationplayedasignicantroleinhelpingtopreventanotherdescentintoprotectionismthatsoexacerbatedeconomicconditionsinthe1930s.Thedramaticdeclineinworldtradein2009(seeFigure1)wasevengreaterinUSdollarterms(-22.6percent)thaninvolumeterms(-12.2percent),thanksinlargeparttoallingpricesoroilandotherprimaryproducts.
1
Worldoutputasmeasuredbygrossdomesticproduct(GDP)alsoellby2.3percentin2009,therstsuchdeclinesincetheendotheSecondWorldWar.Takentogether,thesedevelopmentsamountedtothemostsevereglobaleconomicslowdownsincetheGreatDepression.
1.Explainingthesizeothetradecollapse
Worldtradevolumesellonthreeotheroccasionssince1965(-0.2percentin2001,-2.0percentin1982,and-7.0percentin1975),butnoneotheseepisodesapproachedthemagnitudeolastyear’splunge.Theslumpintradein2009waslargerthanmosteconometricmodelswouldhavepredictedgiventhesizeothedropinGDP,anditwasalsolargerthanthedeclinepredictedbytheWTOintheearlystagesothecrisis.Economistshavesuggestedanumberoexplanationsorthetradecollapse,includingtheimpositionosomeprotectionistmeasuresandreducedaccesstocredittonancetradetransactions.However,theconsensusthathasemergedcentresonasharpcontractioninglobaldemandastheprimarycause.
2
Theweaknessindemandhaditsrootsinthesub-primemortgagecrisisintheUnitedStates,whichbecameapparentin2007andintensiedtowardstheendo2008.WhatbeganasacrisisintheUSnancialsectorspreadtotherealeconomy,tootherdevelopedeconomies,andtotherestotheworldinshortorder.Theimpactothecrisisontradewasurthermagniedbytheproductcompositionotheallindemand,bytheactthatthedeclinewassynchronizedacrosscountriesandregions,andbythegrowthoglobalsupplychainsinrecentdecades.Sharpallsinwealthlinkedtotherecessioncausedhouseholdstoreducetheirspendingonconsumerdurablessuchasautomobiles(tradeinautomotiveproductswasdown32percentin2009),andalsomadermsreconsiderexpendituresoninvestmentgoodssuchasindustrialmachinery(down29percentin2009–seeTable1).Purchasesotheseitemscouldbepostponedeasilyinresponsetoheightenedeconomicuncertainty,andtheymayalsohavebeenmoresensitivetocreditconditionsthanothertypesogoods.Thereductionindemandortheseproductsthenedthroughtomarketsthatsupplyinputsortheirproduction,particularlyironandsteel(down47percentin2009).Shrinkingdemandorironandsteelwasalsolinkedtotheslumpinbuildingconstructionincountrieswherepropertymarketshadbeenboomingbeorethecrisis.ConsumerdurablesandcapitalgoodsmakeuparelativelysmallractionoglobalGDPbutarelativelylargepartoworldtrade.Asaresult,allingdemandortheseproductsmayhavehadagreaterimpactonworldtradethanonworldGDP.Themagnitudeothetradecontractiono2009mayalsohavebeeninfatedsomewhatcomparedwithearlierdeclinesinthe1970sand’80sduetothespreadoglobalsupplychainsintheinterveningyears.Withtoday’smoreextensivesupplychains,goodsrequentlycrossnationalbordersseveraltimesduringtheproductionprocess
a. Intuctin
Figure1:
olume of world merchandise exports, 1965-2009
(Annualpercentagechange)
-15-10-50510151965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
Source
:WTOInternationalTradeStatistics.

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