Deceleration In World Trade Expected

World trade expanded by 5% in 2011 but it was a sharp deceleration after the 13.8% rebound in 2010. Growth is expected to slow even more in 2012 to 3.7% below the 5.4% 20-year average according to the WTO. The slowdown was attributed to a number of shocks including the European sovereign debt crisis, Japanese tsunami and Thai floods hitting production in Japan and China.

Developed economies with export growth of 4.7% did better than expected but developing economies did worse than expected with an increase of 5.4% (developing economies include CIS and China). Developing economies were disproportionately affected by the Japanese earthquake and tsunami, the Thai floods and the disruption in oil supplies from Libya.

The rate of world output growth fell to 2.4% in 2011, down from 3.8% in 2010. The European sovereign debt crisis was the biggest problem along with the supply chain disruption from the natural disasters in Asia and the turmoil of the Arab Spring. Expansion was below the 3.8% 20-year average. The fastest growing economies in 2011 were China with 9.2% then the Middle East with 4.9%, CIS 4.6%, South and Central America 4.5%. The slowest included Japan with -0.5%, US with 1.7% and the EU with 1.5% growth.

Countries with the fastest growing trade volumes included India on 16.1% growth, China with 9.2% and the US with 7.2%. Africa had the biggest decline in exports with a decrease of 8.3%, Japan decreased by 0.5% and the Philippines exports declined 14.3%. China and India had the fastest growing imports with 9.7% and 6.6% respectively. Greece and Chinese Taipei had the most serious decline in imports with -20% and -3% respectively.

There were significant appreciation of the Japanese yen and the Swiss franc against the US dollar in 2011. The yen went up by 10% year-on-year and the franc by 17%. The Swiss National Bank had to intervene in currency markets to keep the value of the currency down against the euro. The IMF real exchange rates show the US dollar's depreciation was stronger in real effective terms at -4.9% and that the average appreciation of other currencies was overstated. The yen only appreciated 1.7%, the yuan (China) rose 2.7%, the Brazilian real stronger at 4.7% and the euro with a rise of 1.8% was quite small.

China was the world's biggest exporter with the USA second biggest, Germany third and Japan fourth. The USA was the world's biggest importer, China second, Germany third and Japan fourth. The Uk was the 11th biggest exporter after Belgium and the 6th biggest importer after France. The UK was second biggest exporter of commercial service after the US and the fourth biggest importer after the US, Germany and China.