Business Report: World trade to grow 8.5%, says WTO

World trade to grow 8.5%, says WTO
October 26, 2004
By Jonathan Fowler

Geneva - Global commerce was expected to grow 8.5 percent by the end of this year despite record oil prices, the World Trade Organisation (WTO) said yesterday.

Oil prices might dampen growth in trade and overall output in 2005, but at present the effects of the rise were being outweighed by economic revival, the WTO said in its annual International Trade Statistics report.

The WTO stopped short of predicting a dollar figure for the value of world merchandise trade for all of 2004, but said it would be 8.5 percent higher than the $7.3 trillion (R45 trillion) recorded for 2003.

Michael Finger, of the WTO's development and economic research division, said the percentage increase was based on constant dollars.

The rate of increase would be even higher if the depreciated dollar and higher oil price were used, he said.

"Growth in world trade in 2004 will not be adversely affected by higher oil prices to any great extent because we are seeing good growth in trade and output in China, Latin America and Africa," said Supachai Panitchpakdi, the head of the WTO.

"We have also seen stronger-than-expected economic recovery in Japan. Strong demand is behind rising prices for oil and other commodities," he said.

WTO said it would release its full statistical report next month.

Initial figures showed that world merchandise trade grew 4.5 percent last year to $7.3 trillion compared with 3 percent growth in 2002 and a decline in 2001, the WTO said.

The recovery was sustained by stronger economic activity in manufacturing and mining, and strong expansion in agriculture, it said. Merchandise trade expanded faster than output.

Demand for foreign goods in the US helped sustain output in other regions, and the US trade deficit continued to rise despite the weakness of the dollar.

The WTO said that strong US demand had helped the global economy, and that a sudden reduction could have "strong repercussions" on world trade.

Trade in the EU was stimulated by its expansion in May to 25 from 15 members. Asian growth in exports and imports was fuelled by China.

"With its rapidly expanding economy, China has become a major trader," the WTO said. "Its surging demand for oil, copper, soybeans and many other primary commodities contributed significantly to higher prices."

"In 2003, as in the second half of the 1990s, China's merchandise export growth was twice as high as that of world trade."

Latin America, which had recorded 12 years of successive deficits, registered a merchandise trade surplus in 2003, with China a major customer.

Some industries did particularly well. Trade in chemicals has accelerated in tandem with a surge since 2000 in pharmaceutical products, with 2003 world chemical exports rising 19 percent to $794 billion and accounting for nearly 15 percent of global trade in manufactured goods.