Recent trends in World Trade

By Alain Henriot

Delegate Director Coe-Rexecode (Paris)

Kiel, 15th-16th March 2010

• Content

1. Overview of the world economy and the

linkage with world trade

2. Imports and domestic demand

3. Exports and price competitiveness

4. Trade balances

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• Financial and raw materials markets have
given an early sign of the rebound at the
beginning of 2009, but show now signs of
hesitation
60000
Domestic Market Capitalization (USD bil ions)

50000

40000

30000

20000
2002 2003 2004 2005 2006 2007 2008 2009 2010

-3
• Raw material and energy prices have also
strongly recovered but signs of hesitation can
be seen recently
Industrial rawmaterials prices Brent
220 January 1988=100 (in dollar terms) 140 U.S. dollars barrel

180 100

80

140

60
120

100 40

30
80

60 18
2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010

-4
• World economy fell into recession in 2008Q4 and 2009Q1
before registering a positive growth in 2009Q2, which
strengthened in the second half of 2009

8
%
y-o-y, %
quarter-on-quarter, %
6

-2

-4

-6

-8
2002 2003 2004 2005 2006 2007 2008 2009 2010

© Coe-Rexecode

-5
• World industrial production back to previous
trend (but a gap remains in terms of level)
2005=100
115

110

105

100

95

90

85
2002 2003 2004 2005 2006 2007 2008 2009

-6
• World trade picked up briskly in the
second half of 2009

y-o-y, % 20 5=10
10 130

CPB 120 CPB

Coe-Rexecode Coe-Rexecode
0

-5 10

-10

10

-15

-20 90
J F M A M J J A S O N D J F M A M J J A S O N D J F J F M A M J J A S O N D J F M A M J J A S O N D J F
2008 2009 2008 2009

-7
• « Soft » data (here world PMI export order books) gave a
leading signal of the upturn, but were misleading on the exact
timing of the recovery and to some extent on its magnitude

y-o-y , %
20 70

10 58

0 45

World tr ade (volume - LHS)

World export order books PMI (RHS)

-1 0 33

-2 0 20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

-8
 • The gap between the current level of world
trade and the pre-crisis level remains big
although narrowing …
y-o-y, % 20 5=10
20 140

120

10

100

0 80

60

-10 CPB
CPB
Coe-rexecode
Coe-Rexecode 40

-20 20
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

-9
• … the consequence of an historical drop
in trade flows

World trade: an historical perspective

annual percentage change
40

30

20

10

-10

-20

-30
1929 1939 1949 1959 1969 1979 1989 1999 2009

- 10
• Turning points of world trade and industrial
production growth cycles are very similar

Growth cycles of world imports and world

industrial production
Deviation to trend
0.1 2

0.0 8
World im ports
World in dustri a l pro ducti o n

0.0 4

-0 . 0 4

-0 . 0 8

-0 . 1 2

-0 . 1 6
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

©Coe-Rexecode

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 • World trade forecast: a strong rebound
followed by a moderate growth (+7.4% in 2010
after -13.5% in 2009)
2 0 5 =1 0
140

2005=100 YoY %
120
2008 119,6
2009 103,6 -13,4
10 2010 111,4 7,5

QoQ %
2008 Q 1 123,0
80
2008 Q 2 122,1 -0,8
2008 Q 3 120,5 -1,3
2008 Q 4 112,9 -6,3
2009 Q 1 100,4 -11,1
60 2009 Q 2 100,2 -0,1
2009 Q 3 103,9 3,7
2009 Q 4 110,0 5,9
2010 Q 1 108,9 -1,0
2010 Q 2 110,6 1,5
2010 Q 3 112,2 1,5
40 2010 Q 4 113,9 1,5

MoM
September - 09 100,8
30 October - 09 103,6 2,7
91 92 93 94 95 96 97 98 9 0 01 02 03 04 05 06 07 08 09 10 November - 09 101,8 -1,7
December - 09 108,4 6,4

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• First signals of a recovery were observed
in emerging countries but no decoupling

Import levels in volume terms

2005=100
150

140
World
Developed economies
130 Emerging countries

120

110

100

90

80
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J
2007 2008 2009

- 13
• China played a leading role, leading other Asian
countries and then Western economies

China: imports by main suppliers

Bil l i o ns of US doll a rs (3 month s mov. avg.)
150.0
Total
100.0 Asia
Apec
Japan
50.0 E.U .
Asean
USA

10.0

5.0

1.0

0.5
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

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• The situation in other emerging countries remain
heterogeneous regarding imports dynamism, although
all regions came back to a positive trend

Import levels in volume terms

2005=100 2005=100
180 160

160 140 Latin America

Emerging Asia (excl. NPIA)
Africa (excl. OPEC countries)
Mid le East (excl. OPEC countries)
140 120

NPIA
120 100
OPEC
CEEC

100 80

80 60

60 40
2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009

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• We can expect only a moderate growth of developed countries
imports in 2010 in volume terms. No further gains of terms of trade
in 2010 (transfers of about 1% of GDP in 2009).

Import levels in volume terms

2005=100 2005=100
120 130

120
Germany
Italy
UK
100 110
France

USA
100
Japan
European Union (7 countries)

80 90

80

60 70
2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009

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• Weakness of the Euro: a relief for the Euro area
exporters

Price competitiveness: national export prices/competitors in a common currency

2005=100 2005=100
120 160

140

110

120

100 100
China
South Korea
80

90 Euro area
Japan
USA 60

80 40
2002 2003 2004 2005 2006 2007 2008 2009 2002 2003 2004 2005 2006 2007 2008 2009

- 17
• Main trade imbalances have not disappeared
with the crisis

Current account balance

Billions of US dollars
600

400

200

2008
0
2009

-200 2010
2011
-400

-600

-800
Euro area Germany Japan China USA

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 • Forecast risks

Downside risks 
. Would Europe and the U.S. find enough support from their
internal demand to keep the global recovery continuing?
. Overheating in China might trigger a double dip late 2010
. Global imbalances put a threat on the exchange rate system
. As a consequence of trade deficits and high unemployment,
the U.S. and Europe can be attracted by protectionist
measures

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 • Forecast risks

Upside risks 
. The catching up process (huge output gap) might imply a
quicker and longer economic growth of activity and trade
than expected

. Emerging countries could take the lead of world trade

growth to satisfy internal needs

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