PRESS RELEASE
World Trade Organization
16 April 1999
WORLD TRADE GROWTH SLOWER IN 1998
AFTER UNUSUALLY STRONG GROWTH IN 1997
The rate of growth in the volume of world merchandise exports slowed
to 3.5 per cent in 1998, from over 10 per cent in 1997, due largely to continuing economic
contraction in much of Asia.
World output growth slipped to 2 per cent in 1998,
compared to 3 per cent in 1997. Although trade growth still exceeded output growth in
1998, it was by a smaller margin than the average for the 1990s.
Export growth in 1999 is expected to match that of
1998, but for this projection to be realized, trade growth will have to accelerate during
the course of 1999. This projection also assumes that slowing output growth in the United
States and Western Europe will be offset somewhat by recovery in Asia. A faster than
expected slowdown in the United States or Western Europe, or slower recovery in Asia,
would clearly imply export volume growth below 3.5 per cent in 1999.
These are among the findings of the WTO's first
report on trade developments last year and the outlook for this year (reproduced below).
Other highlights include the following:
Trade contraction in Asia
has been the biggest factor in the global trade slowdown: But there has been a
marked slowdown in global export expansion throughout 1998, reflected in the performance
of all major regions.
Trade performance measured in volume terms
differed widely among regions in 1998, particularly on the import side: Imports into Asia
fell by 8.5 per cent, stagnated or fell slightly in Africa and the Middle East, and
expanded by 7.5 per cent in Western Europe and by some 10 per cent in North America, Latin
America and the transition economies. Export volume growth was strongest in the transition
economies and Latin America, at 10 per cent and 6.5 per cent respectively, and increased
marginally in Asia (1 per cent). Western Europe's export growth was slightly above the
global average, at 4.5 per cent, and that of North America was below the average, at 3 per
cent.
Exports of merchandise and commercial services
amounted to US$6.5 trillion in 1998: In value terms, merchandise exports amounted to
US$5.2 trillion and commercial services to US$1.3 trillion. This represents a fall of
almost 2 per cent in dollar terms over exports in 1997, but still exceeds the level
attained in 1996. This is the strongest decrease since 1982. Exports of commercial
services recorded the first annual decline in value terms since comprehensive statistics
became available in the mid-1980s.
Commodity prices fell sharply in 1998, pushing the
share of primary products in world exports below 20 per cent in current price terms for
the first time in the post-war period: Oil prices fell by 30 per cent in 1998, or 40 per
cent from a year-end to year-end basis. This picture has been mitigated by increased oil
prices in the first quarter of 1999. Non-oil primary commodity prices fell by 15 per cent
on a yearly average basis in 1998, and by some 10 per cent on a year-end basis. Prices of
internationally traded manufactured goods and services also declined in 1998, but by
considerably less than those of primary products.
Reduced commodity prices have particularly
affected the export earnings of African and Middle Eastern countries: In addition to the
11 member countries of OPEC, some eight other countries depend on fuel exports for more
than 50 per cent of their export earnings. Over twenty, mostly developing countries,
depend on agricultural exports for 35 per cent or more of their export earnings, but these
countries are generally not as severely affected as the oil exporters by commodity price
falls.
I. Main features of world trade in 1998
World GDP and trade growth slowed in 1998 as the
Asian crisis deepened and its repercussions were felt increasingly outside Asia. The
volume of world merchandise exports grew by 3.5 per cent in 1998 after an outstanding
growth rate of 10.5 per cent in 1997. This export volume growth rate compares with an
average growth rate of 6.0 per cent in the period 1990-95. The deceleration in global
output growth was less pronounced than for international trade in 1998, as world GDP rose
by 2 per cent, or by 1 percentage point less than in 1997 (Chart 1).
The deceleration of global merchandise trade growth continued
throughout the year, leaving the global trade level in the fourth quarter of 1998 only
slightly above the level reached at the end of 1997. All major regions experienced a
marked slowdown of their trade growth in the course of 1998.
The recent cyclical fall in commodity prices, which
started in early 1997, continued unabated throughout 1998. Oil prices fell by 30 per cent
and non-oil commodity prices by 20 per cent in 1998, with very different implications for
various countries and regions of the world. While the share of primary commodities
(including processed food) in world merchandise trade was only slightly above one-fifth in
1997, it was more than two-thirds for the Middle East, Africa and Latin America (excluding
Mexico). In a sample of 91 developing countries, 67 of them recorded a share of primary
products in total merchandise exports above 50 per cent, reaching as high as 95 per cent
in some cases.
Prices of internationally traded manufactured goods
and services also have declined in 1998, though considerably less than those of primary
products. Exchange rate variations, which were large in the course of 1998, can have a
major impact on the dollar prices of internationally traded goods. However, as the
dollar's average annual appreciation vis-ŕ-vis the ECU (now the Euro) was considerably
smaller in 1998 than in 1997, West European export prices measured in dollar terms
decreased far less last year than in 1997. This smaller decrease in Europe's export prices
more than offset the stronger price declines in all other regions. Therefore, despite the
accelerated fall in commodity prices in 1998, the global price decline for all merchandise
exports was 5.5 per cent, which was somewhat less pronounced than in 1997.
Trade performance in 1998 differed widely among
regions. While oil-exporting regions recorded the strongest annual value declines in
merchandise exports, countries directly affected by the Asian financial crisis reported
the strongest import decline. The contractionary forces of the Asian crisis and falling
commodity prices were, however, attenuated by the robustness of continued economic growth
in the United States and strengthened demand in Western Europe. The reversal of private
capital flows away from the emerging markets contributed to low interest rates in North
America and Western Europe. In addition, falling fuel prices led to weaker import prices
and real income gains for net-fuel importing countries.
Western Europe, the world's largest regional trader,
was the only region not to record a deceleration in import growth in 1998 compared to
1997. Western Europe's import growth rate of 7.5 per cent was, however, less than the 10
per cent rate recorded by North America, Latin America and the transition economies. In a
sharp contrast, imports into Asia fell by nearly 8.5 per cent, and a stagnation or a
decrease in import volumes is estimated for Africa and the Middle East.
Regional differences in the volume growth of exports
are far less pronounced than for imports. All regions recorded a lower export expansion in
1998 than in the preceding year. The transition economies and Latin America recorded the
strongest volume growth. Asia's export volume increased marginally, as the strong
contraction of intra-Asian trade was only just offset by a sharp rise in extra-regional
flows. Western Europe's export growth remained somewhat above the global average of 3.5
per cent, while that of North America fell below the average.
The dollar value of world merchandise trade declined
by 2 per cent, the strongest decrease since 1982. The export value of manufactured goods
continued to rise slightly while that of agricultural products, metals and fuels declined.
These divergent developments by product category in 1998 pushed the share of primary
products below 20 per cent in current price terms for the first time in the post World War
II period.
Exports of commercial services recorded the first
annual decline in dollar value since 1983. All the three major services categories (i.e.,
transport, travel and other commercial services) saw a decrease. Exports of goods and
commercial services both decreased slightly but at $5225 and $1290 billion respectively,
but were still above the levels reached in 1996 (Table 1).
Table 1
World exports of merchandise and commercial services, 1996-98
(Billion dollars and percentage)
|
Value |
Annual change |
|
1996 |
1997 |
1998 |
1996 |
1997 |
1998 |
Merchandise |
5150 |
5325 |
5225 |
4.5 |
3.5 |
-2.0 |
Commercial services |
1275 |
1320 |
1290 |
6.7 |
3.5 |
-2.0 |
II. World trade developments by country and region
In its seventh year of expansion, the United States
economy experienced an acceleration in private consumption and continued double-digit
investment growth. GDP growth was almost 4 per cent, unchanged from 1997. The booming U.S.
economy stimulated intra-NAFTA trade, and sustained exports and output in other regions. North
America's merchandise import volume rose by 10.5 per cent in 1998, which was the
strongest growth of all regions (Table 2).
Table 2
Growth in the volume of world merchandise trade by selected region, 1990-98
(Annual percentage change)
Exports |
|
|
Imports |
Average
1990-95 |
1996 |
1997 |
1998 |
|
Average
1990-95 |
1996 |
1997 |
1998 |
6.0 |
5.5 |
10.5 |
3.5 |
World |
6.5 |
6.0 |
9.5 |
4.0 |
7.0 |
6.0 |
11.0 |
3.0 |
North Americaa |
7.0 |
5.5 |
13.0 |
10.5 |
8.0 |
11.0 |
11.0 |
6.5 |
Latin America |
12.0 |
8.5 |
22.0 |
9.5 |
5.5 |
5.5 |
9.5 |
4.5 |
Western Europe |
4.5 |
5.5 |
7.5 |
7.5 |
5.5 |
5.5 |
9.5 |
5.0 |
European Union (15)
|
4.5 |
5.0 |
7.0 |
7.5 |
5.0 |
6.5 |
12.5 |
10.0 |
Transition economies |
2.5 |
16.0 |
17.0 |
10.0 |
7.5 |
5.0 |
13.0 |
1.0 |
Asia |
10.5 |
6.0 |
6.0 |
-8.5 |
1.5 |
1.0 |
12.0 |
-1.5 |
Japan
|
6.5 |
5.5 |
1.5 |
-5.5 |
11.5 |
7.5 |
11.5 |
2.0 |
Six East Asian tradersb
|
12.0 |
4.5 |
6.5 |
-16.0 |
aCanada and the United States.
bChinese Taipei; Hong Kong, China; Malaysia; the Republic of Korea; Singapore
and Thailand.
Note: Separate volume data are not available for
Africa and the Middle East, although estimates for these regions have been made in order
to calculate the world total.
In value terms, North America's merchandise exports
decreased slightly in 1998, as volume growth decelerated and prices declined. North
America's merchandise imports, however, increased by 4.5 per cent in value terms, leading
to a widening of the region's merchandise trade deficit to $253 billion (Table
3). The evolution in North America's commercial services trade mirrored that of
merchandise trade, with exports increasing only very slightly and imports rising by 4.5
per cent, reducing further the region's surplus in services trade.
Latin America's GDP and trade growth slowed
sharply in 1998 from the exceptionally high levels recorded in 1997. Falling commodity
prices, a slowdown in private capital inflows in the second half of 1998 and weaker export
markets within the region and in Asia contributed to this development. Marked differences
in economic performance occurred for the two largest economies in the region, with trade
and output growth slowing strongly in Brazil, while Mexico's trade and output performance
remained well above the regional average. Better access to the rapidly expanding United
States market and a higher share of manufactures in its merchandise exports are among the
factors which explain why Mexico's trade and output developments were, for the fourth year
in a row, superior to those of the other Latin American economies.
For Latin America as a whole, the growth in the
volume of merchandise imports continued to exceed that of merchandise exports by a large
margin, and the region's trade expansion both imports and exports remained
stronger than the global average. Latin America's merchandise export value, on the other
hand, decreased by 2 per cent in 1998, as the expansion of Mexico's exports was more than
offset by the decline in exports of all other Latin American countries combined. In
particular, Ecuador and Venezuela, the two major oil exporting countries in Latin America,
experienced the strongest setback, with decreases in excess of 20 per cent. Latin
America's outstandingly strong import growth performance throughout the 1990-97 period
became less dynamic last year, although at 5 per cent, this region, together with Western
Europe, recorded the highest import growth rate of any region. Mexico's import growth rate
of 14 per cent contrasted with the relative stagnation of imports in other Latin American
countries. As Mexico has enjoyed an above average rate of growth in trade for a number of
years, its share of total trade in the region has risen considerably, accounting for 40
per cent in 19981.
Latin America's exports and imports of commercial services are estimated to have expanded
by 4 to 5 per cent in 1998.
Table 3
Growth in the value of world merchandise trade by region, 1990-98
(Billion dollars and percentage)
Exports (f.o.b.) |
|
Imports (c.i.f.) |
Value |
Annual percentage change |
|
Value |
Annual percentage change |
1998 |
1990-95 |
1996 |
1997 |
1998 |
|
1998 |
1990-95 |
1996 |
1997 |
1998 |
5225 |
7.5 |
4.5 |
3.5 |
-2.0 |
World |
5410 |
7.5 |
5.0 |
3.0 |
-1.0 |
898 |
8.5 |
6.5 |
9.5 |
-1.0 |
North America |
1151 |
8.0 |
6.0 |
10.5 |
4.5 |
274 |
9.0 |
12.5 |
10.0 |
-2.0 |
Latin America |
339 |
14.5 |
9.5 |
19.0 |
5.0 |
118 |
14.0 |
20.5 |
15.0 |
6.5 |
Mexico
|
129 |
12.5 |
25.5 |
23.5 |
14.0 |
157 |
7.0 |
8.0 |
7.0 |
-7.0 |
Other Latin America
|
211 |
15.5 |
2.5 |
16.5 |
0.5 |
2338 |
6.0 |
3.5 |
-0.5 |
2.5 |
Western Europe |
2359 |
5.5 |
3.5 |
-1.5 |
5.0 |
2171 |
6.5 |
3.5 |
-0.5 |
3.0 |
European Union (15)
|
2163 |
5.5 |
3.0 |
-2.0 |
5.5 |
178 |
7.0 |
6.5 |
5.0 |
-1.0 |
Transition economies |
207 |
5.0 |
17.0 |
9.5 |
3.0 |
99 |
7.5 |
6.0 |
8.0 |
9.0 |
Central/Eastern Europe
|
133 |
11.5 |
17.0 |
7.0 |
11.5 |
106 |
0.5 |
16.5 |
2.0 |
-16.0 |
Africa |
129 |
5.5 |
-1.0 |
6.0 |
-1.5 |
26 |
3.5 |
5.5 |
6.0 |
-15.0 |
South Africa
|
29 |
10.5 |
-1.5 |
9.5 |
-11.0 |
138 |
1.5 |
17.0 |
4.0 |
-21.0 |
Middle East |
139 |
5.5 |
7.0 |
6.5 |
-6.0 |
1294 |
12.0 |
0.5 |
5.5 |
-6.0 |
Asia |
1090 |
12.0 |
4.5 |
0.5 |
-17.5 |
388 |
9.0 |
-7.5 |
2.5 |
-8.0 |
Japan
|
281 |
7.5 |
4.0 |
-3.0 |
-17.0 |
184 |
19.0 |
1.5 |
21.0 |
0.5 |
China
|
140 |
20.0 |
5.0 |
2.5 |
-1.5 |
504 |
14.0 |
3.0 |
2.5 |
-7.5 |
Six East Asian tradersa
|
438 |
15.0 |
3.0 |
0.5 |
-25.0 |
aChinese Taipei; Hong Kong, China;
Malaysia; the Republic of Korea; Singapore and Thailand.
Stronger demand growth in Western Europe
contrasted with a weaker global economy in 1998, leading to an import expansion which, for
the first time since 1992, exceeded the region's export growth rate. Western Europe was
the only major region which recorded an increase in the dollar value of its exports.
Imports in value terms increased by 5 per cent, very close to the expansion recorded by
both North America and Latin America. The share of Western Europe in world merchandise
trade recovered to 44 per cent following a marked decrease between 1990 and 1997.
Commercial services imports expanded by 4 per cent in 1998, and commercial services
exports by 3 per cent.
The interaction between trade and output in the transition
economies in recent years has been unique among the major regions. Sluggish overall
economic activity, including a decline in regional output in recent years, has been
accompanied by export and import growth rates above the global average. Merchandise
imports have expanded significantly faster than world trade in both real and nominal
dollar values. Merchandise export growth, at 10 per cent in volume terms, was the highest
among all regions. Due to the sharp decline in the dollar export prices, however, the
dollar export value of the region decreased slightly.
Several factors have contributed to this situation,
where trade growth has been above the world average, while output growth has been lower
than the world average. First, inflows of private capital have been strong, in particular
foreign direct investment (FDI) and portfolio investment. Second, FDI has been associated
with a strong increase in capital goods imports, which over recent years has supported the
expansion of exports. Third, a number of East European countries advanced considerably
with their integration into the EU market, in particular Poland, the Czech Republic and
Hungary. The strong trade performance of these countries masked a rather mixed picture in
other transition economies.
The commercial services trade of the transition
economies has been far less dynamic than merchandise trade in the last two years, with
exports decreasing slightly and imports rising moderately. The Russian Federation, the
region's largest commercial services trader, reported a decline in exports and imports of
about 7 per cent in 1998. For Central and Eastern Europe, an increase of 4 per cent was
recorded last year.
Africa and the Middle East have suffered the
brunt of the decline in primary commodity prices in 1998. Despite a moderate recovery in
Africa's GDP - linked to the recovery of agricultural output - Africa's trade remained
sluggish. Export values in the region decreased by 16 per cent in 1998. Oil-exporting
African countries recorded a decrease in exports exceeding one-quarter. Import values
declined only slightly in 1998, but higher trade deficits raise the question whether the
1998 level of import demand can be sustained in 1999. Available data on commercial
services also indicate decreases in the value of both exports and imports. As was observed
for merchandise trade, exports of services decreased faster than imports.
Being the region with the highest share of fuels in
its merchandise exports, the Middle East recorded the strongest contraction in export
value of all regions. Exports for the region as a whole shrank by one-fifth. The decline
in the dollar export value was, however, associated with an increase in the export volume.
The increase in the supply of oil from the region in a period of weak demand has
contributed to a steep erosion of oil prices. The region's merchandise imports adjusted to
some degree to lower export revenues, falling by 6 per cent in 1998 (Table
4).
Asia recorded the strongest import
contraction in volume and value terms of all regions. Import volume decreased by about 8.5
per cent under the impact of Japan's import contraction of 5.5 per cent, and that of
the Asia (5)2 of
more than 20 per cent. It is estimated that within Asia only a few countries recorded an
increase in import volumes (e.g. Australia, China and India). As intra-Asian trade
accounts for about one half of Asia's merchandise exports, the contraction of the area's
imports also held down export growth. Asia's export volume rose marginally as the volume
decrease for Japan, Chinese Taipei and Hong Kong, China were more than offset by the
strong growth of exports of the Republic of Korea and the Philippines. China's exports are
also estimated to have expanded moderately in volume terms.
Table 4
Merchandise exports of emerging markets by product category, 1997
(Percentage shares)
|
Fuels |
Metals and minerals |
Agricultural products |
Manufactures |
Total |
Middle East
|
73 |
2 |
4 |
21 |
100 |
Africa
|
44 |
8 |
19 |
29 |
100 |
Latin Americaa
|
19 |
11 |
36 |
34 |
100 |
Emerging Asiab
|
5 |
2 |
10 |
83 |
100 |
World |
9 |
2 |
11 |
78 |
100 |
aExcluding Mexico.
bAsia,
excluding Japan, Australia and New Zealand.
The dollar value of Asia's imports registered an
unprecedented decline of 17.5 per cent. In 1998 Asia (5) imports contracted by one-third,
and those of Japan by 17 per cent (Appendix Charts 1 and 2). Only certain South Asian
countries recorded a slight increase in their imports (e.g. India and Sri Lanka). The
trade performance of most Asian countries improved in the last quarter of 1998, partly due
to the strengthening of the yen and other Asian currencies vis-ŕ-vis the U.S.
dollar.
The sharp import contraction in the Asia (5)
countries (almost one-third in value terms) is largely explained by the turnaround in
private capital flows and the associated drop in domestic investment and consumption
levels. The decrease in exports of the Asia (5) countries, however, was stronger than
expected even if one takes into account the high share of intra-regional trade in total
trade. Despite the strong currency devaluations which boosted the price competitiveness of
enterprises in the Asia (5) countries, the combined exports of these countries did not
increase their market shares in the major developed markets. In fact, China's exports to
the United States, Japan and major European markets expanded faster than those of the Asia
(5) countries in 1998.
One of the striking features of world trade in 1998
was the exceptionally large variation in the growth rates among countries measured in
value terms. Consequently, the ranking of the leading traders changed dramatically for
both merchandise and commercial services trade (see Appendix Tables 1,
2 and 3). The reversal of capital
flows in 1997-1998 forced many East Asian economies to cut back sharply on their imports
in 1998. Import declines ranged from 26 to 35 per cent (e.g. the Republic of Korea 35 per
cent, Thailand 33 per cent, Indonesia 34 per cent and Malaysia 26 per cent). Retained
imports of Hong Kong, China and Singapore also contracted in this range, despite their
current account surplus position and stronger internal demand.
Contractionary conditions in Japan and the fall in
oil prices led to a fall of 17 per cent in the dollar value of imports, to a level below
that of Germany, the United Kingdom and France. In general, Canada, Mexico and many West
European countries improved their position among the leading importers (and exporters),
while those of Asian countries and Russia deteriorated.
Fuel exporters generally recorded the strongest
decline in merchandise export value among all countries. For a number of them, the dollar
value of export earnings decreased by one-quarter to more than one-third in 1998 (e.g.
Saudi Arabia, Libya, Nigeria and Venezuela). Oil exporters and the East Asian traders
lost, while Mexico and most West European countries gained in market share.
Last year, China's merchandise exports exceeded
those of Hong Kong, China for the first time. The contraction of Russia's trade under the
impact of the fall in fuel prices and the outbreak of the financial crisis have lowered
Russia's (extra-CIS) exports to below those of Ireland and its imports to less than those
of Poland.
Despite the decrease in the nominal value of world
trade, a few countries continued to expand their exports by more than 15 per cent. This
group comprises Ireland, the Philippines, Hungary and Costa Rica. Throughout the 1990-98
period these countries expanded their exports two times faster than the global average.
The United States consolidated its position as the
world leading trader in 1998, accounting for nearly one-sixth of merchandise imports and
services exports and one-eighth of merchandise exports and services imports.
East Asian countries' exports of commercial services
decreased in 1998 significantly faster than their merchandise exports. One explanation for
this development might be that intra-Asian trade is more important for services than for
merchandise exports and thereby more affected by the contraction of Asian demand. However,
the lack of statistical information on the destination of services exports precludes
confirmation of this possibility.
Although price variations in commercial services are
estimated to be far smaller than those for merchandise trade in 1998, the variations in
the performance of individual services traders were at least as large as those for
merchandise traders. Among the leading commercial services exporters, the strongest
declines were recorded by Singapore and Malaysia, while India and Spain recorded increases
in excess of 10 per cent. The Asia (5) countries recorded contractions in their services
imports ranging from about 20 per cent to more than 30 per cent. India, Spain and Ireland
recorded import increases between 10 and 20 per cent. Given the provisional nature of the
above data and the past experience of substantial revisions even for year-old data,
caution is called for in interpreting current services statistics.
III. Repercussions of the fall in commodity prices
In 1998, an increase in the supply of many primary
commodities coincided with a slowdown in economic activity, leading to a sharp drop in
commodity prices. Prices of non-fuel commodities and crude oil fell by 15 per cent and
more than 30 per cent, respectively. Although prices of manufactures decreased as well,
prices of primary commodities decreased much faster (for the second year in a row).
As the oil price decline accelerated during the
course of the year, the year-over-year change in December 1998 exceeded 40 per cent. For
non-fuel primary commodities, the period of weaker prices started earlier and moderated in
the second half, with the result that the decline at the end of the year (about 10 per
cent) was smaller than the annual average for 1998 (Chart 2). Oil exporters have yet to
feel the full impact of lower spot oil prices on their export earnings. Investment and
government expenditure is likely to be curtailed in 1999. Import levels will contract
further, as such a steep price decline cannot be fully absorbed by a reduction in foreign
exchange reserves.
As noted earlier, the steep fall in fuel prices
affects in particular the export earnings of the Middle East and Africa. Besides the 11
member countries of OPEC, in about another eight countries fuel exports account for more
than one half of export earnings. It is important to note that in the first quarter of
1999, the spot oil price recovered from its low level in December 1998 following the
announcement of production cuts by oil producers. It remains to be seen whether this
upward trend will continue or the present price gains will prove sustainable. While these
trends will lead to downward adjustments in the imports of oil-exporting countries in
1999, related income gains in oil-importing countries will at least partially offset this
contractionary tendency in world trade.
Exporters of agricultural products are a larger
group than oil exporters. The decline in agricultural prices therefore affected a larger
number of countries, but generally less dramatically than the oil exporters. This is for
two reasons. First, the decline in agricultural product prices was less steep than for
oil. Second, the exporters of agricultural products generally depend less on a single
commodity than do the fuel exporters (Appendix Table 4).
IV. Global trade outlook for 1999
The slowdown of world trade and output growth had
not been reversed by the end of 1998. While Japan's GDP continued to shrink in the fourth
quarter of 1998 and many West European countries recorded a weakening in their economic
performance, the U.S. economy accelerated.
Significantly slower GDP growth in Brazil in 1998
and contraction in Russia will negatively affect the growth of neighbouring economies with
whom they have extensive trade ties. The sharp contraction of output and trade in the Asia
(5) countries appears to have bottomed out, and a moderate recovery is the most likely
scenario for 1999. As there is generally a time-lag between reduced export earnings and
lower import levels, the steep fall of oil and commodity prices will have its full impact
on investment and consumption in the commodity exporting countries only in 1999. The
extent of this impact may be mitigated in the case of oil prices, however, should the
recent increases in prices prove sustainable.
Global output growth may weaken slightly in 1999.
Moderately weaker growth in the United States and Western Europe may not be offset by a
lower rate of contraction in Japan. Given the size of the Russian and Brazilian economies
in regional output, production levels in the transition economies and Latin America is
likely at best remain unchanged from the preceding year.
On the basis of this sluggish output growth, overall
trade expansion may not differ much in 1999 from the 3.5 per cent observed in 1998. Even
this moderate expansion, however, is associated with major downside risks and would imply
an acceleration of trade growth in the course of 1999. If slower output growth in the
United States or Western Europe turns out to be more pronounced than presently expected,
and if the recovery in East Asia (including Japan) is more delayed than projected by most
observers, world trade expansion could be below 3.5 per cent. The United States is
expected to record the highest growth rate among the industrial countries in 1999, but on
the condition that U.S. consumers do not rapidly correct their historically low savings
rate, and that any stock market correction will not have a major impact on investor and
consumer confidence.
Click below for
Appendix Table 1
Appendix Table 2
Appendix Table 3
Appendix Table 4
Footnotes:
1
Mexico's share in Latin America's merchandise exports in 1998 was 43 and that for
merchandise imports was 38 per cent.
2. These are the
countries that were most immediately affected by financial crisis that broke in mid-1997 -
Indonesia, Malaysia, Philippines, the Republic of Korea and Thailand.
------------RRojas Research Unit 1999------ |