Global trade rebounded in 2017 growing at 4.5% in volume terms much better than 1.8% witnessed in 2016 and strongest in six years. Total trade rose to $17.3 trillion, sharp increase of 11% in value terms. The performance despite the protectionist tendencies and trade tensions probably points to the resilience of trade relations across countries and its relative independence from any individual nation. Trade in commercial services increased by 8% to $5.2 trillion.
Trade volume is measured by calculating the average of exports and imports to avoid double counting. Higher growth in value than volume reflects higher prices leading to better terms of trade for exporting countries. This contrast with the performance in 2015 when trade in volume terms has grown by nearly 4% but had declined by 12% in value terms due to sharp decline in crude & commodity prices.
In terms of regions, European Union was the largest exporter at $5.9 tr followed by China with $2.2 tr and US with $1.1 tr. EU figures needs to be looked with caution since almost two-thirds of this is within EU itself. However its export to rest of the world excluding intra-EU trade is also high at $2.1 tr. With significantly lower imports of $1.8 tr, China has the largest trade surplus of $420 billion. In terms of grouping, developing countries, with share of 43%, recorded growth of 12% against decline of 5% in 2016. For developed nations who have a share of nearly 54% in total exports, growth was 9%.
The report separately looks at the performance of least developed countries (LDCs) comprising of 42 countries mostly across Africa such as Chad, Congo, Sudan etc. These countries recorded growth of 13% in their exports after three years of decline. However, their share in total exports is miniscule at 0.95%, slightly higher than 0.93% in 2016. More importantly, most of the exports are primary products implying negligible gains of value addition to these economies.
Within the product groups, fuel and mining products, with share of 15% in exports, recorded the highest growth of 28%. Even though its share in not very high, it receives lo of attention since the exports are concentrated from one region. Manufactured goods, which accounts for as much as 70% of total exports, increased by 8%. Within manufacturing, chemical products, office and telecommunications products and automotive products accounted for 44% of exports.
Other than goods trade, there is a substantial amount of trade in commercial services such as transport, travel, financial services, consultancy, product/project related services. With a share of over 14% in exports and 10% in imports, US remained the world’s leading trader of commercial services. Share of developing economies in services exports is lower at 30.6% as compared to 43% in goods exports pointing to their more specialized nature where advanced economies have a stronger grip. India stands at No 2 position in terms of exports from developing economies. Surprisingly, Africa and CIS recorded the highest growth at 14% and 13% for services exports boosted by tourism receipts. Still, LDCs had a share of barely 0.6% in commercial services trade, even lower than their share in goods trade of 0.95%.
Growth of trade relative to growth of GDP is widely tracked by WTO to gauge the changes in trade dynamics. The ratio stood at over 2.0 in the 1990s when trade flourished. This came down sharply to 0.8-1.0 in the years after global financial crisis and has bounced back to 1.5 in 2017.
Ashish Agrawal
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