KUCHING: After plunging by more than 10 per cent in the recession of 2009, world trade rebounded strongly in 2010 but the recovery of the volume of world exports has lost momentum.
According to the World Economic Situation and Prospect 2013 by the United Nations (UN), growth of world trade decelerated sharply during 2012, mainly owing to declining import demand in Europe, as the region entered into its second recession in three years, and anaemic aggregate demand in the US and Japan.
Developing countries and economies in transition have seen demand for their exports weaken as a result.
“The monthly trade data of different regions and countries showed a clear sequence of the weakening demand that originated in the euro area transmitting to the rest of the world. Import demand in Greece, Italy, Portugal and Spain started to decline in late 2011 and fell further during 2012, but the weakness in trade activity has spread further to the rest of Europe as well, including France and Germany,” mentioned the report.
“In tandem, imports of the US and Japan also slowed significantly in the second half of 2012.”
East Asian economies that trade significantly with the major developed countries have experienced commensurate declines in exports. Further down the global value chain, energy and other primary-exporting economies have seen demand for their exports weaken as well.
Brazil and the Russian Federation, for instance, all registered export declines in varying degrees in the second half of 2012. Lower export earnings, compounded by domestic demand constraints have also pushed down gross domestic product (GDP) growth in many developing countries and economies in transition during 2012.
The report opined that this had led to flagging import demand from these economies, further slowing trade of developed countries.
At the same time, a rise in international protectionism, albeit modest, and the protracted impasse in the world multilateral trade negotiations, had also adversely affected international trade flows.
It added that in the outlook for 2013 and 2014, the continued weak global growth outlook and heightened uncertainties lead to expectations that world trade will continue to expand at a rather tepid pace of 4.3 per cent in volume terms in 2013 and 4.9 per cent in 2014, compared to 3.3 per cent in 2012 and 6.8 per cent during 2005-2008.