TRALAC - Trade Law Centre

Africa's Export Growth Highest Since 1980

Friday, 20 January 2006

Source: Engineering News (South Africa)

Riding a wave of higher oil and commodity prices, and vigorous global trade growth, including recovery in trade in office and telecommunications equipment, developing countries saw their share in world merchandise trade rise sharply in 2004 to 31%, the highest since 1950, according to WTO figures released in 2005.

However, a marked slow-down in overall economic growth that began in the second half of 2004 is likely to decelerate world merchandise trade growth from 9% in 2004 to 6,5% in 2005, WTO economists say.

“As trade continues to play a grow- ing role in economic activity, it is increasingly important for develop-ment and poverty alleviation. An ever-growing number of coun-tries are both trading more and participating more actively in set- ting the trading rules,” said WTO director-general Supachai Panitch-pakdi.

“Africa’s exports, for example, grew by an impressive 30% in 2004, after rising strongly in 2003.

Attributable in significant mea-sure to commodity price rises, this marks the highest growth in African exports since 1980. This trade growth has been asso-ciated with an improved expansion in production, which registered more than 4% growth for the continent in 2004. Forecasters predict a comparable growth rate in 2005,” he said.

“It is through trade that countries can chart a path towards sustainable development and a higher standard of living.” While the trend is encouraging, trade expansion is still hampered by barriers, which must be brought down. These barriers exist in all WTO members and are a drag on eco-nomic growth. “The best way to reduce these barriers and to ensure more equit-able trading rules for all nations is to complete the Doha Development Agenda round of trade negotiations,” Panitchpakdi said. A surprisingly strong global eco- nomy boosted real world merchan- dise trade growth in 2004, despite record-high crude oil prices. The rate of trade expansion was close to 10% at mid-year, but decel-erated in the second half in line with weaker global GDP growth.

Nominal merchandise trade growth (21%) was the highest in 25 years owing to a combination of strong real trade growth (9%) and a sharp increase in dollar prices (11%). In 2004, the dollar value of world trade in commercial services increased by 16%. The expansion of services trade was stimulated by strong recovery in transportation and travel services.

Commodity prices again increased faster than prices of manufactured goods in 2004. Prices for fuels and metals expand- ed by more than 30%, according to the International Monetary Fund commodity price index. Prices for beverages and textile fibres, however, were much weaker, recording only a marginal increase in 2004.

Price developments influence trade growth Price developments largely deter-mined the value of merchandise trade growth by region. The regions/countries with a large share of fuels in their merchandise exports recorded above-average export growth in 2004 — that is, the Middle East, Africa and the Com- monwealth of Independent States (CIS). In the case of the CIS, very strong economic growth also contributed to a recovery of CIS trade inside the group.

Asia’s merchandise trade growth was sustained by strong US import demand, and intra-Asian trade, stoked by a recovery in electronics trade. In 2004, China became the largest merchandise trader in Asia, and the third largest exporter and importer in world merchandise trade.

North America recorded the weak- est growth in nominal merchandise exports and imports of all regions in 2004. North America is the only one of the seven major regions distin-guished in this report which record-ed a trade deficit in 2004.

The US alone had a merchandise trade deficit of $618-billion, equi-valent to a record 6% of US GDP, and also to 7% of world merchandise trade.

The enlargement of the European Union to 25 members in May 2004 stimulated trade between the new and the old members of the Euro-pean Union. Including intra-trade, the enlarged European Union accounted for 42% of world merchandise exports and for 52% of world commercial ser-vices exports in 2004.

Europe was the only region for which the growth in the dollar value of merchandise and services trade did not exceed the previous year’s level, but this was owing entirely to exchange-rate movements. Measured in euros, Europe’s mer-chandise and commercial services exports (and imports) rose faster in 2004 than in 2003. Higher oil prices improved the terms of trade of developing coun-tries as a group, and, in particular, those of the developing regions of the Middle East, Africa and Latin America. Strong commodity prices and the recovery in the trade of office and telecommunications equipment resulted in a sharp increase in the merchandise exports from develop-ing economies. The share of the developing eco- nomies in world merchandise exports was 31% in 2004 – the highest level since 1950.