WORLD TRADE PATTERNS
In 1998, the dollar value of total world trade was estimated at over US $7 trillion. By 2017, exports of goods and services have more than tripled, reaching $23 trillion. It is greater than the gross national product of every nation in the world. Stronger trade growth relative to GDP growth is expected to continue at least into 2018, barring major economic shocks.
One measure of the importance of trade is that one-fourth of everything grown or made is now exported. The rapid increase in the growth of world trade after WWII can be traced to increased consumption of goods and services, as more people joined the middle class in many countries. Trade liberalization both at the regional and international levels has created an environment conducive to the growth and expansion of world trade. New technologies such as computers, telecommunications and other media also assisted in the physical integration of markets.
- Merchandise trade presently accounts for 77 percent of world trade (US$17.73 trillion for 2017). Merchandise trade includes agriculture, mining and manufactures. Trade in manufactured goods has been the dynamic component of world merchandise trade.
- Commercial services export is estimated at US$5.28 trillion accounting for 23 percent of world trade. It had been growing faster than trade in merchandise for many years. World commercial services exports grew by 8 percent compared to that of merchandise (11 percent) in 2017.
- Global trade recorded its highest growth rate in six years in 2017, both in volume and value terms. Merchandise trade volume, as measured by the average of exports and imports, grew by 4.7 per cent, marking the ﬁrst annual increase in excess of 3.0 per cent since 2011. The dollar value of merchandise exports rose by 11 per cent, to US$ 17.73 trillion.
- The largest gains were recorded on the import side in developing and emerging economies, where trade growth surged to 7.2 per cent in 2017 from 1.9 per cent in 2016. Import demand also picked up in developed economies, albeit less dramatically, as merchandise trade growth in volume terms increased to 3.1 per cent in 2017 from 2.0 per cent in 2016.
- Asia recorded the highest growth in merchandise trade volume in 2017 for exports (6.7 per cent) and imports (9.6 per cent) following two years of modest expansion . North American exports and imports rebounded strongly in 2017, with growth of 4.2 per cent and 4.0 per cent respectively, after a very low growth rate in 2016. South and Central America and the Caribbean’s import growth turned positive again in 2017 with an increase of 4.0 per cent, following three years of steep declines. Meanwhile, European trade ﬂows continued to expand at a moderate pace, with growth of 3.5 per cent for exports and 2.5 per cent for imports in 2017.
- Several factors contributed to the revival of world trade in 2017. These include increased investment spending, which is highly correlated with trade, and higher commodity prices, which raise incomes in resource-based economies and encourage investment in the energy sector, e.g. shale oil in the United States
- A substantial part of exports (about 70%) from developed nations go to other developed nations. The percentage of exports from developing countries to developed countries has progressively declined over the past 40 years from 70% in 1970 to about 50% in 2017.
- There are more than 200 regional trade agreements in operation worldwide and the share of world trade accounted for by members of regional trade agreements increased from 37% in 1980 to 70 percent in 2011. For example, 48 percent of exports from North America nations went to other nations in North America. Similarly, 72% exports from European nations and 52% of exports from Asian went to countries in the same region.
- In many OECD countries, merchandise trade accounts for about 48% GDP while services trade accounts for about 11 percent of GDP in 2010.
(See WTO, World Trade Statistical Review 2018)