Description
The recovery of world trade was as vigorous in 2010 as had been its decline in 2009. It lost a great deal of momentum in 2011, however, with the growth of world trade volume slowing from 12.6 per cent in 2010 to 6.6 per cent.
41
Chapter II
International trade
Slowing merchandise trade
Te recovery of world trade was as vigorous in 2010 as had been its decline in 2009. It lost
a great deal of momentum in 2011, however, with the growth of world trade volume slow-
ing from 12.6 per cent in 2010 to 6.6 per cent. Weaker global economic growth, especially
among developed economies, is the major factor behind the deceleration. As a result, over
the four-year period that started with the sharp deceleration of world trade in 2008, the
level of world import volume has remained well below trend.
1
In the baseline outlook for
2012 and 2013 (see chap. I), global economic activity would falter without going into re-
cession. Even with the possibly optimistic assumptions of the baseline, world trade would
continue to drift further away from the trend (fgure II.1). Against this benchmark, the
volume of world trade would be 30 per cent below the level that might have been reached
had there been no global fnancial crisis.
During the crisis, import volume of developing countries fell to about 13 per cent
below trend, but recovered strongly, to catch up almost fully with the rapidly rising trend
experienced in the early 2000s (fgure II.2). In 2010, developing country import growth
contributed to half of world trade growth (compared with 43 per cent in the pre-crisis
period of 2004-2007). Among developing regions, East and South Asia led the recovery in
1 This refers to the continued linear trend estimated for 2001-2007.
Growth in world trade
decelerated in 2011
with the weakening of
developed economies
Figure II.1
Below-trend growth of world merchandise trade, 2002-2013
15
0
-15
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
a
2012
b
2013
b
100
120
140
160
180
200
220
240
Source: UN/DESA.
a Partly estimated.
b Projections.
World import volume
(left-hand scale)
World gross product
(left-hand scale)
World import
trend (2001-2007)
(right-hand scale)
World import
level (2001=100)
(right-hand scale)
42 World Economic Situation and Prospects 2012
external demand, accounting for about three quarters of the growth of imports of devel-
oping economies in 2010, followed by Latin America and the Caribbean, accounting for
17 per cent; Western Asia and Africa contributed about 7.0 and 2.0 per cent, respectively.
China continues to be the key driver of import growth among developing countries, ac-
counting for 37 per cent of the growth of imports of all developing countries in 2010.
Te below-trend recovery of global trade is almost fully explained by the weak-
er import demand in developed economies. Import demand had declined to 21 per cent
below trend by 2009 and did not catch up thereafter. Te gap is expected to widen further,
to 30 per cent by 2013, in the baseline scenario.
Shifting patterns of merchandise trade
Te marked weakness of import demand from developed countries following the collapse
in 2008-2009 comes on top of a decade-long decline of their predominance in inter-
national trade. Between 1995 and 2010, their value share in world merchandise trade
declined from 69 to 55 per cent, while that of developing countries increased from 29 to
41 per cent (fgure II.3). Over this 15-year period, China’s share alone increased fourfold
from 2.6 per cent to about 10.0 per cent. Over the same period, the market share of Latin
America and the Caribbean increased from 4.5 per cent to 5.9 per cent. Te value of
Africa’s merchandise exports rose from $100 billion in 1995 to $560 billion in 2010, while
its share in world trade improved modestly from 2.0 per cent to 3.2 per cent. World market
penetration of exports from the least developed countries (LDCs), small island developing
States (SIDS) and landlocked developing countries (LLDCs) remains extremely limited.
For example, even though LDC exports have grown over fvefold since 1995, their world
Figure II.2
Diverging trends in world import growth, 2002-2013
100
150
200
250
300
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
a
2012
b
2013
b
Source: UN/DESA.
a Partly estimated.
b Projections.
Import trend,
developing countries
(2001-2007)
Import level,
developing countries
(2001=100)
Import trend,
developed countries
(2001-2007)
Import level,
developed countries
(2001=100)
43 International trade
market share is still less than 1 per cent. World market shares of SIDS and LLDCs amount
to much less than 1 per cent.
Te shifting patterns of trade are associated with the rapid industrial growth
of a range of developing countries. Moving from agricultural and other primary produc-
tion to manufacturing tends to drive up the import intensity of production; moreover,
global trade increasingly involves value chains with diferent geographical locations con-
tributing various parts to the production processes. Such shifting patterns of trade, as
well as the increased demand for primary commodities from the rapidly growing econo-
mies, has strengthened South-South trade (fgure II.4). South-South trade increased at
a rate of 13.7 per cent per year between 1995 and 2010—well above the world average
of 8.7 per cent. Over the same period, the South’s merchandise exports to the North
increased by 9.5 per cent per annum.
While recent import demand in most developing countries has remained vig-
orous, only a few of these countries have succeeded in climbing up the global value chain
and diversifying their export base to cater to markets previously dominated by developed
economies. Indeed, about 83 per cent of the increase in the share of developing countries’
total world trade between 1995 and 2010 (fgure II.3) was accrued by the subset of emerg-
ing economies (the BRICS
2
plus Mexico and the Republic of Korea). East and South Asia
include three of the most dynamic emerging economies—China, India and the Republic
of Korea—accounting for about one third of world exports and two thirds of developing
country exports in 2010. Some of these gains, as noted, result from growing cross-border
specialization involving smaller segments of value chains, which in turn increase trade
shares and the value of shipments, imports and exports (box II.1).
2 Brazil, the Russian Federation, India, China and South Africa.
South-South trade has
expanded rapidly
Figure II.3
Gains and losses in world market shares of merchandise trade
a
0
10
20
30
40
50
60
70
80
Developed
countries
Developing
countries
Economies
in transition China India
Emerging
economies
b
1995
2000
2007
2010
Source: UN/DESA.
a Share of total exports and
imports in total world exports
and world imports.
b Includes Brazil, China, India,
Mexico, the Republic of Korea,
the Russian Federation and
South Africa.
44 World Economic Situation and Prospects 2012
Figure II.4
Developed (North)
a
and developing (South)
a
economies,
bilateral shares in world exports, 1995 and 2010
1995
2010
0
10
20
30
40
50
60
North-North North-South
b
South-North
c
South-South
Source: UNCTAD secretariat
calculations, based on
UN Comtrade, available fromhttp://comtrade.un.org/db/.
a Developed economies
(North) and developing
economies (South) are based
on the UN/UNCTAD
country classifcation.
b Exports from North
to South.
c Exports from South
to North.
Maritime transportation underpinning
the growing role of the South in world trade
Maritime transport handles over 80 per cent of the volume of global trade and accounts for over
70 per cent of its value. Since 1970, global seaborne trade has expanded on average by 3.1 per cent
every year, reaching an estimated 8.4 billion tons in 2010. At this pace, and assuming no major up-
heaval in the world economy, global seaborne trade is expected to increase by 36 per cent in 2020
and to double by 2033. While bulk trade accounts for the largest share of global seaborne trade by
volume, the containerized cargo contribution grew more than threefold between 1985 and 2010.
Developing countries are driving growth in global merchandise trade, with South-
South links emerging strongly. Africa and Latin America are increasingly becoming suppliers of
China’s primary commodity needs and, in return, China’s consumer goods are being exported more
and more to these regions. These developments are shaping the confguration of maritime transpor-
tation. Figure A illustrates the changing position of developing countries in global seaborne trade
between 1970 and 2010. The share in unloaded goods grew from 18 to 56 per cent, mainly owing
to rising import volumes. As shown in fgure B, Asia’s share of unloaded goods increased from 6.4 to
45.9 per cent over the same period, confrming Asia’s increasing share of world trade.
Uncertainties in the global supply of shipping capacity
In 2010, deliveries of new vessels reached a 36-year record high, increasing the world’s maritime car-
rying capacity by 11.7 per cent. The surge in deliveries following the deep economic downturn and
trade collapse of 2009 refects the prevailing time lag between orders and deliveries inherent in the
shipbuilding industry. The massive order book of 2008, placed when the world economy and trade
were booming, led to record ship deliveries in 2010 following the fragile recovery.
Box II.1
45 International trade
Box II.1 (cont’d)
Figure A
Share of developing countries in world volume of goods,
loaded and unloaded, 1970, 1980, 1990, 2000 and 2010
Percentage of world total, tons
0
10
20
30
40
50
60
70
1970 1980 1990 2000 2010
Goods loaded Goods unloaded
Source: UNCTAD, Review of
Maritime Transport,
various issues, Geneva.
Source: UNCTAD, Review of
Maritime Transport,
various issues, Geneva.
Figure B
Share of world volume of goods, loaded and unloaded,
by developing regions, 1970 and 2010
Percentage of world total, tons
Goods loaded Goods unloaded
0
5
10
15
20
25
30
35
40
45
50
Africa Asia
Latin America
and the
Caribbean Africa Asia
Latin America
and the
Caribbean
1970 2010
46 World Economic Situation and Prospects 2012
For example, as shown in fgure II.5, the share of intraregional trade within
the Association of Southeast Asian Nations (ASEAN) as a proportion of ASEAN trade
with the rest of the world increased by 2.4 percentage points (from 21.4 to 23.8 per cent)
between 2002 and 2010. Meanwhile, the share of total ASEAN trade with China, Japan
and the Republic of Korea increased from 26.7 to 29.8 per cent.
3
As a result, in 2010,
trade within this broader region accounted for more than half of the value of total ASEAN
goods traded worldwide.
Te trade gains from such regional trade are unevenly distributed, however.
While the share of the Republic of Korea in total ASEAN trade remained constant, at
about 4.6 per cent, that of China doubled to reach 14.3 per cent, mostly at the expense
of the share of Japan. It would thus seem that regional trade agreements are not the only
driving force behind strengthened intraregional trade; much is likely associated with the
reshaping of world trade by global production chains.
3 ASEAN and the three countries mentioned in the text agreed to strengthen economic ties in
1997. This broader regional cooperation is sometimes referred to as ASEAN Plus Three (ASEAN+3
or APT).
In the next few years, analysts forecast a continued oversupply of deliveries in the dry
bulk and container sectors. Moreover, some indicators hint at the continued expansion of shipyard
capacities in countries such as China and the Republic of Korea well beyond current market require-
ments. On the one hand, the current imbalance in ship carrying-capacity strongly challenges the
shipping industry, as oversupply exerts a dampening efect on freight rates and revenues. Increased
ship sizes pose a further challenge to owners, who need to fnd ever-larger shipments of cargo to
achieve the economies of scale required to operate these larger ships with a proft. On the other
hand, this may be good news for importers and exporters, as there should be no lack of afordable
shipping capacity to carry the moderate revival of world trade expected for 2012.
Investing in seaports and trade infrastructure as a counter-cyclical strategy
Mirroring growth on the demand and supply sides, world container port throughput increased by an
estimated 12.6 per cent, to 528.8 million twenty-foot equivalent units (TEUs), in 2010 after stumbling
briefy in 2009. Forecasts for 2011 and 2012 are for continued double-digit growth, strengthened by
the resumption of many port expansion projects put on hold during the economic downturn.
Keeping in mind the long-term requirements for a country’s foreign trade expansion
and the fact that a decline in transport investment today will inevitably entail future capacity re-
strictions on trade, transport infrastructure investments should be seen as a counter-cyclical policy
option with the advantage of contributing to fostering long-term growth through trade.
The expansion of maritime trade is accompanied by the opportunity for operational
economies of scale. Indeed, the technological developments required for the efcient management
of port services and infrastructure have also encouraged the construction of increasingly larger ships.
In this rapidly changing environment, transport connectivity seems key in determining the extent to
which cost savings derived from economies of scale are passed on to importers and exporters. The
resulting improvements in competitiveness are critical to ensuring a country’s efective integration
into global trading networks. However, as developing countries strive for improved infrastructure
capacity, they will be confronted with increasing concentration of shipping services. Recently, the
United Nations Conference on Trade and Development (UNCTAD) found that 35 coastal countries
were served by only three or fewer liner companies in 2011.
a
In other words, the consolidation of
services provided by the container shipping industry to achieve improved operational efciency may
also have reduced negotiating powers for some players and resulted in less overall market efciency
in some market segments.
Box II.1 (cont’d)
a UNCTAD, Review of
Maritime Transport 2011
(United Nations publication,
forthcoming).
47 International trade
Volatile terms of trade
Trade afects national income through three factors: prices of exports, prices of imports
and the volume of demand.
4
Te international terms of trade (defned as the ratio of the
average export price and import price indices) provide a synthetic measure of relative
price changes over time. Preliminary estimates for 2011, suggest that the terms of trade
of mineral- and oil-exporting economies have continued their rebound from the export
price collapse in 2009 (fgure II.6).
5
In contrast, the terms of trade for economies relying
on manufactured exports have deteriorated on average. Exporters of minerals, including
oil, have seen dramatically large price shocks since 2007. Yet, world market prices for
those commodities seem to be on a longer term upward trend (see below). In 2011, min-
eral exporters experienced strongly improved terms of trade, in part since prices of some
precious metals increased sharply because heightened global economic uncertainty raised
their importance as a store of value.
Regional aggregates of the combined shocks caused by the changes in the terms
of trade and in the volume of export and import demand are shown in fgure II.7A, and
4 These factors can be calculated, with some degree of accuracy, by combining information
from UN Comtrade (import and export structure), the United Nations Conference on Trade and
Development (UNCTAD) and other sources (international prices), and the Central Planning Bureau
of the Netherlands (CPB) and other sources (volume changes of imports and exports). See also
Alex Izurieta and Rob Vos, “Measuring the impact of the global shocks on trade balances via price
and demand e?ects”, World Economic Vulnerability Monitor, Methodological Notes, available fromhttp://www.un.org/en/development/desa/policy/publications/wevm/monitor_note.pdf.
5 Estimates for 2011 are extrapolations from observed data covering the ?rst nine months of the
year. The forecasts for 2012 and 2013 are based on trade volume and commodity prices implied by
the baseline scenario for global trade and output growth presented in chapter I.
Terms of trade have
improved for mineral and
oil exporters
Primary commodity
exporting countries are
facing the biggest trade
shocks
Figure II.5
Shifting total trade market shares in Asia, 2002-2010
0
5
10
15
20
25
30
35
2002
ASEAN trade with China, Japan and Republic of Korea
Intra-ASEAN trade
ASEAN trade with Japan
ASEAN trade with China
ASEAN trade with Republic of Korea
2003 2004 2005 2006 2007 2008 2009 2010
Percentage share of each category over total ASEAN trade with the world
Source: UN/DESA, based on
data from the International
Trade Center.
Note: Some values for
2005-2007 are interpolated
from values in 2004 and 2008.
48 World Economic Situation and Prospects 2012
trade shocks by country groupings, according to export specialization, in fgure II.7B.
6
All regions faced negative trade shocks in 2009, followed by a turnaround
during the global economic recovery of 2010-2011. Te adverse shock of 2009 was mainly
caused by the massive contraction of global demand (more than 3 per cent of world in-
come), but in part also by the collapse in commodity prices. Te trade shocks were strong-
est among the economies in transition and countries in Western Asia and Africa. Because
of the sharp fuctuations in energy and other commodity prices, energy exporters faced the
strongest trade shocks, followed by mineral exporters. Agricultural exporters sufered less
dramatic trade shocks, in part because many of them are net energy importers and hence
see commodity price shocks that afect both sides of their external balances. For similar
reasons, most LDCs have not seen comparably strong terms of trade shocks, despite the
large swings in commodity prices. LDCs consist of a heterogeneous group of economies,
encompassing a wide range of export specializations, from energy and minerals to agri-
cultural and manufacturing exporters. Given the variety of export structures, LDCs, as a
group, resemble an “export-diversifed” economy on average, but individual countries have
faced large shocks because of their skewed export base and/or high dependence on food
and energy imports.
Economies with more diversifed export specialization have faced milder trade
shocks over the past three years and also have more stable export revenues and levels of
import demand, enabling more stable output growth. A similar pattern is observed for
6 The ?gures show the total trade shock estimated as the change in export prices times the volume
of the previous year’s exports, minus the change in import prices times the volume of last year’s
imports, plus changes in the volume of import demand times the price of last year’s imports. The
table in the appendix to the present chapter provides a breakdown of the components of the
trade shock.
Countries with diversi?ed
exports or those specialized in
manufactures have been less
vulnerable to trade shocks
Figure II.6
Barter terms of trade of selected groups of countries, by export structure, 2000-2013
Index: 2000=100
60
80
100
120
140
160
180
200
220
240
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Oil exporters
Exporters of minerals and other mining products
Exporters of agricultural products
Exporters of manufactures
Sources: UNCTADStat and
UN/DESA World Economic
Vulnerability Monitor
(WEVUM).
49 International trade
countries specializing in manufactured exports, which, although having sufered a decline
in their terms of trade, have also seen steady demand growth for their exports.
In the outlook for 2012 and 2013, trade shocks are forecast to be mild when
measured as annual averages. Trade volumes are expected to show moderately positive
growth in the baseline scenario, while most commodity prices, except those of some min-
erals, especially precious metals, are assumed to experience corrections from the sharp
increases witnessed during 2010 and the frst half of 2011.
Figure II.7
Trade shocks by region and export specialization, 2001-2013
(percentage of GDP of the group as a whole)
A. By region
W
o
r
l
d
D
e
v
e
l
o
p
e
d
e
c
o
n
o
m
i
e
s
E
c
o
n
o
m
i
e
s
i
n
t
r
a
n
s
i
t
i
o
n
L
a
t
i
n
A
m
e
r
i
c
a
a
n
d
t
h
e
C
a
r
i
b
b
e
a
n
W
e
s
t
e
r
n
A
s
i
a
E
a
s
t
a
n
d
S
o
u
t
h
A
s
i
a
A
f
r
i
c
a
L
e
a
s
t
d
e
v
e
l
o
p
e
d
c
o
u
n
t
r
i
e
s
15
12
9
6
3
0
-3
-6
-9
-12
-15
B. By main sector of export specialization
W
h
o
l
e
r
e
g
i
o
n
(
W
)
E
n
e
r
g
y
(
>
4
0
p
e
r
c
e
n
t
)
M
i
n
e
r
a
l
s
(
>
4
0
p
e
r
c
e
n
t
)
A
g
r
i
c
u
l
t
u
r
e
(
>
4
0
p
e
r
c
e
n
t
)
M
a
n
u
f
a
c
t
u
r
e
(
>
5
0
p
e
r
c
e
n
t
)
D
i
v
e
r
s
i
f
e
d
15
12
9
6
3
0
-3
-6
-9
-12
-15
2001-2007
2008
2009
2010-2011
a
2012-2013
b
Source: UN/DESA World
Economic Vulnerability
Monitor (WEVUM).
a Partly estimated.
b Projections.
50 World Economic Situation and Prospects 2012
Unstable commodity markets
Primary commodity prices boomed from 2003 to mid-2008, constituting the longest
rally of the post-Second World War period and following almost three decades of low,
albeit volatile, prices. Te boom came to an abrupt end with the global fnancial crisis.
Commodity prices collapsed with the fall in global demand, exacerbated by a drop in in-
vestments in commodity derivatives due to fnancial sector deleveraging. Prices rebounded
strongly from the second quarter of 2009 in line with the global recovery, but in particular
with the resumption of robust growth in emerging and other developing countries (fg-
ure II.8). Te upward cycle continued for all major commodity groups until the middle of
2011. In the case of metals, agricultural raw materials and tropical beverages, average price
levels for the year 2011 as a whole in fact surpassed 2008 averages.
Te rebound in commodity prices can be explained in part by the “pincer
efect” of a tightening market caused by supply constraints and continuously growing de-
mand for commodities, especially from emerging economies. Insufcient investments in
oil production and refnery capacity, along with supply shocks caused by, inter alia, the
political unrest in the Middle East and North Africa, have constrained oil markets. In the
case of food and agricultural markets, a variety of factors have held back supply and kept
markets tight, including adverse weather patterns caused by greater climatic variability, de-
clining productivity growth in some regions, low levels of inventories, and increasing scar-
city of arable farmland and water. Measures in recent years by Governments in a number
of countries, including export restrictions and subsidies on the use of food crops for biofuel
production, have further increased scarcity in the markets for food crops in particular.
The rebound in commodity
prices continued upwards
until mid-2011
Slow supply expansion and
rising demand have
pushed up prices
Figure II.8
Total non-oil commodity price index, 2000-2011
a
Index: 2000=100
Dollar
Special Drawing Rights
50
100
150
200
250
300
350
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
Source: UNCTAD.
a Average of the
frst nine months.
51 International trade
Financial factors have had a visible impact on recent commodity price trends
and volatility. Te longer term trend towards a depreciating United States dollar has exac-
erbated the upward trend in commodity prices, since most commodity trade is in dollars
and traders demand higher prices in order not to lose revenue because of the exchange-rate
efect. Weak regulation of fnancial derivatives markets and policies of keeping interest
rates low have pushed massive fnancial investments into speculative trading in buoyant
commodity futures markets.
7
Tis is assessed to have increased price volatility as well as
to have inserted an upward bias in spot prices.
8
Te annual number of commodity futures
contracts traded globally has risen from 418 million in 2001 to 2.6 trillion in 2011, with a
more than 14-fold increase in notional value, to $13 trillion.
9
Te dramatic rise in the vol-
ume of transactions by large fnancial actors has been suggested as a plausible explanation
for the disconnection between price movements and market fundamentals. Consequently,
the issue has attracted the growing attention of the international community, including
the Group of Twenty (G20) and the larger arena of the United Nations General Assembly
(box II.2).
Food and agricultural commodities
After sliding considerably in the frst half of 2010, the agricultural commodity price indices
of the United Nations Conference on Trade and Development (UNCTAD) rose sharply,
reaching peaks around February 2011 (fgure II.9). Despite subsequent falls, prices remain
comparatively high. Te food price index averaged 268 points from January to September
2011, up 21.8 per cent from the same period in 2010. Within this category, the average
price of the main cereals (wheat, maize and rice) has continued its upward movement,
although rising at a slower pace than in the previous year. Meat, vegetable oils and sugar
prices have also been on the rise.
Te impact on net food-importing countries has been considerable, but vari-
able. For example, the Horn of Africa was hit by famine following prolonged drought,
compounded by confict and insecurity, while other countries in Africa enjoyed good
harvests of maize and sorghum. In developing Asia, in particular, rising prices for wheat,
edible oil and other food items have been a major factor in accelerating headline infa-
tion. Where food price increases were contained by food subsidies, they have given rise to
widening fscal defcits, as was the case in Western Asia.
Te outlook for wheat crops in 2012 is uncertain. Increased production projec-
tions for the European Union (EU) and the Commonwealth of Independent States (CIS),
7 The deregulation of United States exchanges in 2000 allowed index investors to be considered
“commercial” market participants, thereby exempting them from certain regulatory obligations.
For instance, investments in futures markets can be treated as “over-the-counter”(OTC) derivatives,
not listed in the exchanges. The OTC market involves trading derivatives directly between two
parties, where there is a risk that one party may default. In exchange trading, all parties must place
collateral (called a “margin”) against their positions held at the exchange. Margin calls are required
by the exchange whenever the collateral of any trading agent falls short of the margin required to
hold their positions. Positions are immediately liquidated if the margin call is not met. This reduces
risk-taking and the risk of default.
8 See World Economic Situation and Prospects 2011 (United Nations publication, Sales No. E. 11.II.C.2),
box II.1, pp. 53-54; and UNCTAD, Trade and Development Report 2011: Post-crisis policy challenges in
the world economy (United Nations publication, Sales No. E.11.II.D.3), chap. V.
9 UNCTAD projections based on Bank for International Settlements statistics (see UNCTAD,
Commodities and Development Report 2012: Commodities in the twenty-?rst century: Perennial
problems, new challenges, which way forward? (United Nations publication, forthcoming).
Financial variables are
increasingly in?uencing
commodity prices
Food prices peaked
in early 2011
The impact on net food-
importing countries has
been considerable
52 World Economic Situation and Prospects 2012
Commodity market volatility and fnancialization
reaches the international policy agenda
Major shifts in commodity market supply and demand balances have occurred over the past
few years. However, these shifts alone are insufcient explanation of the rapid increase in price
volatility afecting a wide range of commodities over the last half decade. Recent research and
analyses increasingly support the view that the greater involvement of fnancial investors and their
increased investments in commodities as fnancial assets have altered the functioning of commod-
ity markets.
a
The adverse impact of food price volatility on the livelihood of millions of poor house-
holds and the potential infationary efects of high food and energy prices have placed commodity
price issues back on the international policy agenda. In response to these concerns, the G20 iden-
tifed food security as a priority area for the frst time in the November 2010 Seoul Development
Consensus for Shared Growth. During the Ministerial Meeting on Development in Washington, D.C.,
in September 2011, the work of the G20 in this area culminated in the endorsement of the Action
Plan on Food Price Volatility and Agriculture to which Agriculture Ministers had agreed earlier in
Paris in June 2011.
b
This policy-oriented Action Plan emphasizes the need for enhanced agricultural
productivity and greater market transparency, while encouraging market participants to make better
use of commodity price risk management tools.
Taking a broader approach, the G20 Study Group on Commodities endorsed an analyti-
cally oriented report in November 2011. This report examines the determinants of recent commodity
price volatility, including the changing nature of commodity-related fnancial instruments and market
participants, in order to shed light on their growing infuence on commodity price developments.
c
It
argues that fnancial investors can cause commodity prices to deviate from fundamental values when
their investment is large and when they engage in herd behaviour. Herding occurs when market
participants extrapolate from past price movements or mimic other traders’ position-taking without
looking at market fundamentals.
d
While the report acknowledges the existence of conficting em-
pirical evidence of a persistent impact of fnancial investors on the level, volatility and correlation of
commodity prices, it also recognizes the growing research supporting the view that recent fnancial
investments have decisively afected price dynamics over short time horizons; furthermore, it fnds
that some episodes of large and sudden price movements support the common-sense hypothesis
that amplifcation mechanisms existing in other fnancial markets are also at work in commodities fu-
tures and options markets. Subsequently, at the Cannes Summit in November 2011, the G20 endorsed
a report on commodity derivatives markets, prepared by the International Organization of Securities
Commissions (IOSCO), calling for more stringent regulation and enhancing the intervention power of
market authorities to ensure that commodity derivatives markets fulfl their function as price-discov-
ery and risk-transfer mechanisms.
e
Although these recommendations have a similar thrust, they are
less ambitious than the regulations that the U.S. Commodity Futures Trading Commission (CFTC) and
the European Commission propose to implement in the United States of America and the European
Union, respectively, over the next two years.
Partly as a result of the sequence in which the various reports on commodity price
developments have become available, the recent analytical fndings and regulatory recommenda-
tions are thus far refected in G20 policy statements only to a limited extent. However, the continued
salience of commodity price issues may lead the G20 to deepen its approach and translate these
fndings and recommendations into tangible and internationally harmonized policy actions.
In addition, the growing consensus that heightened commodity price volatility afects
food security and sustainable development, in particular in commodity-dependent countries, has
triggered a deepening debate extending beyond the perceived scope of G20 engagement. Non-
members of the G20 are increasingly contributing to this debate with their own initiatives. The draft
resolution on addressing excessive price volatility in food and related fnancial and commodity
markets, initially tabled by the Group of 77 and China could, if adopted by the General Assembly
in December 2011, represent an important step in addressing this issue under the global and repre-
sentative umbrella of the United Nations.
Box II.2
a For a review of such
studies and further analysis
of the interplay between
physical and fnancial
commodity markets,
see UNCTAD, Trade and
Development Report 2011:
Post-crisis policy challenges in
the world economy (United
Nations publication, Sales
No. E.11.II.D.3), chap. V.
b Seehttp://agriculture.
gouv.fr/IMG/pdf/2011-06-
23_-_Action_Plan_-_
VFinale.pdf.
c The report is available fromhttp://www.g20.org/exp_01.
aspx..
d See UNCTAD, Trade and
Development Report 2011,
op. cit., for further analysis.
e See International
Organization of Securities
Commissions (IOSCO),
“Principles for the
Regulation and Supervision
of Commodity Derivatives
Markets”, September 2011.
Available fromhttp://www.
iosco.org/library/pubdocs/
pdf/IOSCOPD358.pdf.
53 International trade
together with competitive prices relative to maize, may continue to encourage the use of
wheat for livestock feed, which could push up prices. Te sugar price may continue its rise
in 2012, underscored by higher projected world demand for refned sugar in the light of
anticipated market defcits. Te tropical beverages price index, which has risen steadily
since December 2010, may show moderation as a result of better-than-expected supply
conditions. Te vegetable oilseeds and oil price index has declined from its all-time high
of February 2011, but price volatility may continue amidst uncertain supply and demand
prospects in major oilseed-producing and -importing countries.
Te average price index for agricultural raw materials increased by 91 points
over the frst three quarters of 2011 compared with the same period in 2010, mostly as
a result of supply shortfalls generated by adverse weather conditions and strong demand
in Asian emerging economies. Natural rubber prices remained high in 2011 owing to
strong demand for tyres in emerging market economies and high energy costs (especially
crude oil) which afected synthetic rubber prices. Supply disruptions from poor weather
conditions in major producing countries also contributed to increased prices. Tis pattern
was evident for cotton, too, which reached a historic high in March 2011 ($2.3 per lb), up
63 per cent from its 2009 average.
Minerals, ores and metals
Te average UNCTAD price index for minerals, ores and metals, calculated from January
to September 2011, increased by 21 per cent compared with the same period in 2010
(fgure II.10). Metal prices remained high over this period owing to a combination of
tightening supply and strong industrial demand from Asian countries and Brazil.
Prices of metals have
increased and are expected
to rise further in 2012
Figure II.9
Price indices of commodity groups, January 2000-September 2011
Tropical beverages
Minerals, ores and metals
Food
Agricultural raw materials
Price index—all groups (in terms of current dollars)
50
100
150
200
250
300
350
400
450
J
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Index: 2000=100
Source: UNCTAD.
54 World Economic Situation and Prospects 2012
Over the next few years, the slow expansion of supply in the mining sector,
coupled with an already challenging situation in upgrading mining capacity, is set to tight-
en supply further, likely resulting in rising metal prices in the medium term. According
to the International Copper Study Group (ICSG), the growth in global copper demand is
expected to outstrip copper production before the end of 2011 causing a production defcit
of about 160,000 tonnes of refned copper.
Gold continues to serve as a safe store of wealth during times of uncertainty
or exchange-rate volatility. Between January and December 2009, gold prices rose by
32 per cent, and yet again by 24 per cent from January to December 2010. By September
2011, the monthly average gold price set a new record of $1,772 an ounce, as investors took
refuge following weaker-than-expected recovery in both the United States of America and
Europe, coupled with perceived sovereign debt problems on both sides of the Atlantic.
The oil market
During the frst three quarters of 2011, global oil demand increased by 1.2 per cent
compared to the same period in 2010. Oil demand in developed countries declined by
0.7 per cent as their economies weakened. Tis decline was ofset by strong demand for
oil from emerging market and developing countries, up by 3.4 per cent in 2010, pushed
by robust economic growth, particularly in China and India. Non-Organization for
Economic Cooperation and Development (OECD) countries commanded an estimated
48.7 per cent of global oil demand in 2011.
World oil supply increased by 1.2 per cent during the frst three quarters of
2011. Production in the member States of the Organization of the Petroleum Exporting
Oil prices increased
moderately as demand
from emerging economies
grew, while OECD
demand slackened
Figure II.10
Price indices of non-ferrous metals, January 2007-September 2011
Aluminium
Copper
Lead
Zinc
Nickel
J
a
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0
7
A
p
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O
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p
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u
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c
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a
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1
A
p
r
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1
J
u
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2
0
1
1
Index: 2000=100
100
0
200
300
400
500
600
700
800
900
Source: UNCTAD.
55 International trade
Countries (OPEC) increased by 2.7 per cent. Saudi Arabia has activated its spare capacity
and raised its supply by 1.4 million barrels per day (mbd), to reach 9.4 mbd in the third
quarter to compensate for the production loss in Libya. Meanwhile, oil supply by non-
OPEC countries, which represents two thirds of world production, is estimated to have
increased by 0.1 per cent owing to slowing production in OECD countries.
Oil stocks in the OECD countries decreased slightly in the frst half of 2011.
Furthermore, on 23 June, the International Energy Agency (IEA) decided to release 60 mb
of strategic stocks in a coordinated manner over a 30-day period.
During the frst ten months of 2011, oil traded at about 40 per cent above the
average price of 2010. Te Brent oil price averaged $112 per barrel (pb), compared with
$79 pb for 2010 as a whole. A price hike occurred after the frst of the Arab uprisings in
Tunisia on 18 December 2010; it intensifed as political unrest spread across North Africa
and Western Asia. Speculation in oil futures markets about possible supply shortages be-
cause of the political unrest pushed up oil prices long before production facilities in Libya
were actually afected and despite the fact that supply outages were fully compensated for
by the activation of Saudi spare capacity. Te Brent oil price peaked at $126 pb in mid-
and end-April before stabilizing at around $110 pb. Te coordinated release of strategic
stocks by IEA members failed to appease fears of supply shortages; the Brent price did not
fall below $100 pb until October 2011, and only did so for a very short time.
Furthermore, Brent oil has been trading at an increased premium compared to
other crudes, especially West Texas Intermediate (WTI) crude (fgure II.11A). A number
of factors are thought to explain the widening spread. On the supply side, infrastructure
constraints, including constraints in pipelines and access to storage facilities at the deliv-
ery point of North American crudes in Oklahoma have led to a build-up of inventories.
Additionally, Brent production in the mature North Sea felds is slowing down. Tese two
phenomena are not new, however. Other explanations point to specifc demand factors and
the role of fnancial speculation. Indeed, as most of Libya’s oil is exported to Europe, the
outage in supply caused by the war translated into acute demand pressures on Brent, which
is chemically one of the closest substitutes for light sweet crudes from Libya. Rumours that
the European downstream industry might not be able to process similar quantities of
more heavy crudes in the short run subsequently nurtured fears that oil shipment patterns
would need to be rerouted. Tese fears further aroused the interest of fnancial speculators,
causing a surge of 32 per cent (year on year) in Brent open interests between January and
September, compared with 2 per cent in WTI open interest.
10
During the frst three quarters of 2011, oil price volatility also increased. Brent
oil prices, in particular, registered larger swings than in 2010 (fgure II.11B). Tis has in-
creased the cost of hedging for buyers and sellers engaged in the physical oil trade. Several
studies suggest that the fnancialization of commodity markets has shaped the process of
price formation in spot markets, and a more stringent regulation of these markets is called
for (box II.2). However, the debate is not settled and is likely to remain controversial,
especially considering the huge vested interests of the fnancial players.
In the outlook for 2012, global oil demand is assumed to increase by
1.6 per cent, to 90.6 mbd. Demand from non-OECD countries, mainly driven by eco-
nomic growth in China and India, is expected to rise by 3.7 per cent on the back of ex-
panding industrial production and private energy consumption. Among OECD member
10 Open interest is the total number of derivative contracts not settled in the immediately preceding
period for a speci?c underlying security. A large open interest indicates more activity and liquidity
for the contract.
Political instability and fears
of supply shortages kept
prices high during
most of 2011
Financialization of
commodity markets has
ampli?ed price swings
in spot markets
Oil demand is expected to
rise moderately in 2012,
driven by demand from
developing countries
56 World Economic Situation and Prospects 2012
Source: UN/DESA, based on data from the United States Energy Information Administration, available fromhttp://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm.
Figure II.11
Oil prices
J
a
n
-
2
0
1
0
D
o
l
l
a
r
s
p
e
r
b
a
r
r
e
l
F
e
b
-
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0
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0
M
a
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M
a
y
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e
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e
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1
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y
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S
e
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2
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1
N
o
v
-
2
0
1
0
D
e
c
-
2
0
1
0
A. Widening spread between Brent and WTI spot prices (daily prices), 2010-2011
Brent
West Texas Intermediate (WTI)
60
70
80
90
100
110
120
130
J
u
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1
B. Increasing Brent price volatility (daily prices), 1987-2011
Absolute volatility (rebased)
Spot price (dollars per barrel)
0
20
40
60
80
100
120
140
160
180
200
57 International trade
States, demand is projected to remain at the 2011 level. On the supply side, non-OPEC
countries are expected to post an increase in output of 1.8 per cent in 2012, to 53.7 mbd,
driven by non-OECD producers such as the Russian Federation, Brazil and newcomer
Ghana. Supply in OECD countries, which provide about 35 per cent of non-OPEC out-
put, will rise by 1.6 per cent as the exploitation of Canadian tar sands is expanding. Many
Gulf countries will likely seek to enhance oil revenues to fund increased social spending
resulting from measures announced in the wake of political unrest spreading across the
Middle East. Consequently, output from OPEC countries is expected to increase unless
oil prices stay up. Setting aside the uncertain infuence of fnancial speculation, the Brent
price is forecast to average $100 pb in 2012. Market conditions will be characterized on
the supply side by a tightening of spare capacity among OPEC producers as well as by
a restocking of strategic oil reserves, while global demand will continue to be driven by
developing countries, especially those in Asia. Te outlook is subject to signifcant uncer-
tainty, however. Weaker-than-expected global economic activity could create signifcant
downward pressure on oil prices, while a revival of political unrest in Gulf countries or
a stronger depreciation of the value of the dollar could trigger renewed price hikes. In
addition, in the context of low interest rates in major fnancial markets, more specula-
tive capital could be attracted to commodity markets in search of higher yields, possibly
exacerbating oil price volatility.
Growing trade in services
In 2010, services trade returned to positive growth in all regions and groups of coun-
tries, especially developing countries, the least developed amongst them in particular.
Nonetheless, the level of world trade in services has not yet fully recovered from the
downturn caused by the global fnancial crisis, mainly because of the sluggish recovery of
such trade in the developed countries and economies in transition. In all regions, growth
in services trade is lagging behind its pre-crisis pace (fgure II.12A and B). Unlike mer-
chandise trade, however, services trade has shown less sensitivity to the global demand
shock triggered by the fnancial crisis. As a corollary, the rebound in trade in services was
also less pronounced during the recovery from the crisis. International tourism services
experienced similar patterns (box II.3).
As a result of diverging growth, the share of developing countries in world
services trade has increased notably, essentially at the expense of developed countries.
Despite fast growth of their tradable services industry, the share of LDCs has remained
almost constant since their initial level of services trade was very low.
Te major services exporters among developing and transition economies
further improved their overall ranking in the world’s top 10 between 2006 and 2010
(table II.1). China, which is both the largest importer and exporter of services among
developing countries and transition economies, moved from the eighth to the fourth posi-
tion in terms of exports, and from the sixth to the third position in terms of imports. In
the top 10 for developing countries and economies in transition, 8 of the top exporters also
rank among the top 10 importers. While their share in world trade in services is growing,
most developing countries and economies in transition continue to run a defcit on their
internationally traded services balance.
World trade in services
has been more stable than
merchandise trade
58 World Economic Situation and Prospects 2012
A. Exports of services (annual growth rates)
-20
-15
-10
-5
0
5
10
15
20
25
30
2006 2007 2008 2009 2010
B. Imports of services (annual growth rates)
2006 2007 2008 2009 2010
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
Source: UN/DESA.
Figure II.12
International trade in services
World
Developing economies
Economies in transition
Developed economies
Least developed countries
59 International trade
International tourism
Rebounding tourism
In 2010, world tourism rebounded from the recession induced by the fnancial crisis. Worldwide,
international tourist arrivals reached 940 million in 2010, up 6.6 per cent over the previous year. The
majority of destinations reported positive and often double-digit increases, sufcient to surpass
pre-crisis peak levels or bring them close thereto. Recovery was stronger in developing economies,
showing a growth rate of 8 per cent, compared to 5 per cent in developed countries that have not
yet fully recovered from a greater fall in 2009 (with Europe following a slightly diferent pattern as
weather and geological shocks caused some travel restrictions during 2010).
Receipts earned from international tourism by destination countries are registered
as services exports (travel credits) in the balance of payments. Worldwide, receipts increased by
5.4 per cent in real terms, reaching a value of $926 billion in 2010. Throughout 2009, international
tourism was more resilient than other trade categories, decreasing only by 5.5 per cent in real terms,
while overall exports decreased by 10.7 per cent. Besides travel-related fnancial services, tourism
also generates export earnings through international passenger transport. As the latter amounted to
$174 billion in 2010, total tourism receipts reached $1.1 trillion in 2010. Travel and passenger transport
exports account for 30 per cent of the world’s exports of commercial services and 6 per cent of
overall exports of goods and services. As a worldwide export category, tourism ranks fourth after
fuels, chemicals and food, while ranking frst in many developing countries (see fgure).
In the frst eight months of 2011, international tourist arrivals grew robustly, by
4.5 per cent. Europe, with 6 per cent growth, was the region showing the strongest growth, which
may seem surprising considering the continued economic uncertainty. Northern Europe, Central and
Eastern Europe, and Southern Europe grew by 7 per cent or more in 2011, following a milder recovery
in the previous year. Furthermore, Mediterranean destinations benefted from the shift of travel away
from the Middle East and North Africa, which fell by 9 and 15 per cent, respectively, impacted in both
cases by political turbulence.
Box II.3
International tourism revenue vis-à-vis other main export commodities, 1990-2010
Billions of dollars
0
500
1,000
1,500
2,000
2,500
3,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
International tourism
Fuels
Chemicals
Food
Automotive products
Sources: World Tourism
Organization (UNWTO) and
World Trade Organization
(WTO).
Note: International tourism
accounts for 30 per cent
of service exports and
6 per cent of goods and
services exports.
60 World Economic Situation and Prospects 2012
Growing trade in transport services
Trade in services in developing countries is concentrated mostly in transport, travel and
other merchandise trade-related services. Tis is the case on both the import and export
sides. Transport services play a key role in the process of economic development as they
allow for the integration of local goods production into global supply chains and for bring-
ing domestically produced goods directly to international markets. In recent decades,
developing countries have substantially expanded their expertise in the feld of transporta-
tion, especially maritime transport. After initially becoming major market players in the
provision of seafarer and vessel registration, they more recently extended their dominant
position to practically all major maritime sectors. Today, developing economies have more
than a 50 per cent market share in 6 of the 11 sectors covered in table II.2. In shipbuilding,
scrapping and provision of seafarer and vessel registration, developing countries account
for more than three quarters of the supply. In 3 of the 11 sectors, developed countries
continue to dominate, with about 90 per cent or more of the market, notably in protection
and indemnity (P&I) insurance services, ship fnancing and ship classifcation.
Te existing elevated degree of market concentration in the maritime services
business and lack of adequate institutional capacity are seen to form major barriers to entry
for many players. Te increased specialization of maritime services providers in a limited
number of countries increases the distance between them. As a result, diferent industries
in the maritime services business develop ever more independently from each other, but
linkages strengthened by external economies of scale remain between them. For example,
a ship owner might fnd it more convenient to have both insurance and fnancing services
Economies of scale form
barriers to entry in the
maritime services business
Growth in Asia reached 6 per cent, but was unevenly distributed across subregions.
While South-East Asia and South Asia registered double-digit rates, North-East Asia and Oceania
grew more weakly. South America, benefting from favourable economic momentum and increased
regional integration, experienced growth of 13 per cent. In sub-Saharan Africa, arrivals grew by
4 per cent.
On the demand side, expenditures on travel abroad (imports) for the frst part of 2011
continued to be buoyant, thanks to the emerging economies of Brazil, China, India and the Russian
Federation, each increasing by over 20 per cent. Major mature markets—such as Canada, Germany,
Italy and the United States—showed healthy growth rates in the range of 4-6 per cent, while Australia,
the Republic of Korea and the Scandinavian markets had even stronger growth.
According to the latest survey of the World Tourism Organization (UNWTO) Panel of
Experts, while confdence has been deteriorating, it remains positive. Tourism demand is expected to
soften for the remainder of 2011, with full-year arrivals growing between 4 and 4.5 per cent. In 2012,
growth is projected to be in the range of 3 to 4 per cent.
Tourism and employment
Tourism is a signifcant sector for both developed and emerging economies, driving growth by ofer-
ing opportunities for development and diversifcation through the creation of jobs, enterprises and
infrastructure. The direct contribution to gross domestic product (GDP) in major economies of both
inbound and domestic tourism varies between 1.5 and 7.7 per cent.
a
If additional non-direct efects
were included, the contribution of the sector may be anticipated to reach 11 per cent. The direct
contribution to employment lies between 2 and 14 per cent of the growth of total employment.
A recent UNWTO study fnds that employment in tourism was less impacted by and
recovered more rapidly from the crisis compared to other economic sectors.
b
Employment decline
in hotels and restaurants was limited to developed economies in Europe and the Americas, while in
emerging economies, relevant employment growth was actually positive during the crisis.
Box II.3 (cont’d)
a World Tourism
Organization (UNWTO),
“Positioning tourism in
economic policy: evidence
and some proposals”,
available from http://
statistics.unwto.org/sites/all/
fles/docpdf/t20_0.pdf.
b UNWTO, “Economic
crisis, tourism decline and
its impact on the poor”
(forthcoming). A preliminary
version of the study is
available fromhttp://www.
unglobalpulse.org/projects/
rivaf-research-economic-
crisis-tourism-decline-and-
its-impact-poor.
61 International trade
in the same country. Similarly, for ship classifcation, businesses may prefer to be closer
to their clients in the shipbuilding and ship operation businesses, or to banks that fnance
ships requiring certifcation. Furthermore, institutional capacity and demand matter as
well. Having a well-functioning legal framework as well as adequate technical standards
and infrastructure in place is necessary for the expansion of an industrial base that will
allow advantage to be taken of internal economies of scale arising in sectors of maritime
services, such as the operation of container ships or shipbuilding.
In addition to those factors, the participation of developing countries in global
maritime and related businesses has been guided by diferent strategies. Some have relied
on the cost advantage of low wages, others have ofered fscal incentives or have chosen to
support the development of national maritime services through promotional policies and
Table II.1
Rankings of top developing countries and economies in transition in trade in services, 2006-2010
Annual percentage change
Share 2006 2010
2006 2007 2008 2009 2010
World
Rank
Rank among
developing
countries
World
Rank
Rank among
developing
countries
Shares
a
and rankings of top 10 exporters
China 3.2 3.5 3.8 3.7 4.2 8 1 4 1
India 2.4 2.5 2.7 2.6 3.1 12 3 8 2
Singapore 2.3 2.4 2.6 2.6 2.9 13 4 9 3
Hong Kong SAR
b
2.5 2.4 2.4 2.5 2.9 10 2 10 4
Korea, Republic of 1.7 1.8 2.3 2.1 2.2 19 5 15 5
Russian Federation 1.1 1.1 1.3 1.2 1.2 25 6 23 6
Taiwan Province of China 1.0 1.0 0.9 0.9 1.1 26 7 24 7
Thailand 0.9 0.9 0.9 0.9 0.9 28 9 27 8
Turkey 0.9 0.8 0.9 1.0 0.9 27 8 28 9
Brazil 0.7 0.7 0.8 0.8 0.9 31 11 29 10
Developing economies 25.1 25.5 26.4 27 29.6
Economies in transition 2.4 2.6 2.9 2.7 2.7
Shares
a
and rankings of top 10 importers
China 3.7 4.0 4.3 4.8 5.1 6 1 3 1
India 2.1 2.2 2.4 2.5 3.1 14 4 8 2
Singapore 2.4 2.3 2.4 2.5 2.8 13 3 10 3
Korea, Republic of 2.5 2.6 2.6 2.4 2.6 12 2 11 4
Saudi Arabia 1.8 1.9 2.0 2.3 2.1 16 5 16 5
Russian Federation 1.6 1.8 2.0 1.9 2.0 18 6 17 6
Brazil 1.1 1.1 1.3 1.4 1.8 27 10 18 7
Hong Kong SAR
b
1.3 1.3 1.3 1.3 1.4 20 7 20
Thailand 1.2 1.2 1.3 1.2 1.3 23 9 23 9
United Arab Emirates 0.9 1.0 1.2 1.1 1.1 29 11 25 10
Developing economies 29.9 30.7 32.1 33.1 35.7
Economies in transition 3.0 3.3 3.6 3.3 3.4
Source: UNCTADStat.
a
Shares in world total.
b
Special Administrative Region of China.
62 World Economic Situation and Prospects 2012
targeted support. Developing countries such as the Republic of Korea and Singapore have
shown that growth of maritime businesses can work as a catalyst for economic progress.
11
Trade policy developments
The Doha Round
Te ongoing multilateral trade negotiations under the Doha Round (or “Doha Development
Agenda”) of the World Trade Organization (WTO)), which was launched more than ten
years ago, in November 2001, are at a complete stalemate, with practically no prospects
of completion owing to the “all or nothing” approach of the WTO, although there has
been considerable progress on specifc issues. Te most feasible way to conclude the Round
would seem to be by agreeing to a “smaller package” based on what has been agreed upon
thus far, with signifcant additional concessions to provide the LDCs with an “early har-
vest”. Otherwise, the likelihood of any further progress on multilateral trade negotiations
may well be undermined.
In this context, some participating Governments have raised the notion of a
“variable geometry” approach in WTO negotiations with a view to undertaking deeper
commitments and obligations amongst themselves. Tis approach is clearly a step removed
from the fundamental concept of the WTO as a “single undertaking”, which is the basis
for all existing WTO multilateral trade agreements—but not for those of the General
Agreement on Tarifs and Trade (GATT) before it. If implemented, it may put at risk the
unconditional most favoured nation (MFN) treatment, which has been the cornerstone
of the multilateral trading system since the inception of GATT at the end of the 1940s.
Te current irreconcilable deadlock in the Doha Round has provided ad-
ditional motivation for countries to engage in preferential bilateral and regional trade
11 See UNCTAD, Review of Maritime Transport 2011 (United Nations publication, forthcoming).
The Doha Round remains
in a stalemate
The stalemate has
increased the role
of RTAs
Table II.2
Maritime sectors, comparison
Maritime transport sectors
Share of top 10
countries in
world total
Share of developing
countries in top
10 countries
Number of developing
countries among
top 10 countries
Ship scrapping (dwt) 99 99 5
Ship registration (dwt) 72 53 6
Ratings (headcounts) 50 90 8
Ofcers (headcounts) 52 75 6
Shipbuilding (dwt) 98 76 6
Classifcation (dwt) 69 26 4
Container terminal operations (TEU) 62 67 5
Container ship operation (TEU) 73 42 5
Ship owning (dwt) 95 11 2
Insurance, protection and indemnity (dwt) 75 2 2
Ship fnancing (US dollars) 70 0 0
Source: UNCTAD, Review of Maritime Transport 2011 (United Nations publication, forthcoming).
Note: “TEU” and ”dwt” are cargo capacity measurement units meaning “twenty-foot equivalent unit” and
“deadweight tonnage”.
63 International trade
agreements (RTAs). Te incentive for RTAs, in comparison to the WTO multilateral trade
agreements, is the possibility of undertaking deeper trade policy integration by including
and implementing WTO-plus and/or WTO-extra provisions such as those for non-tarif
measures, services sectors, intellectual property rights, or trade policy-related labour and
environment issues. RTAs also require much less time to negotiate—a crucial factor for
businesses. But this does not necessarily mean that RTAs also serve the objectives of long-
term development strategies of developing countries or that they would be in the interest of
workers in developed countries. Contradictions may arise when relatively small countries
fnd themselves either negotiating with powerful global businesses or with powerful coun-
try counterparts. Likewise, without the safeguards of multilateral and globally inclusive
understandings regarding the protection of employment, workers remain vulnerable to the
growing political power of corporations operating as global supply chains.
For example, global supply chains led by business interests play a major cata-
lytic role for new RTAs, as an increasing number of frms are now ofshoring production
networks to developing and other economies. Tis will require new predictable trade and
investment rules. According to WTO estimates, there are now about 300 RTAs in force
worldwide compared with 37 in 1994, half of which have come into efect since 2000.
Many countries, including developing economies, see RTAs as a way to shield themselves
against external shocks, lock in market access with their key market counterparts, particu-
larly those in the North, and circumvent the lengthy multilateral process of negotiations
under the WTO. In the case of South-South trade, it is easier to improve market access
through RTAs, consistent with each country’s development objectives. Many developing
countries perceive this to be the most feasible means for gaining market access as the
prospects for completing the multilateral trade negotiations seem more remote.
The continued threat of protectionism
Since early 2008, a number of countries have introduced protectionist measures restricting
trade as part of their response to the global crisis. Tese attempts at protecting domestic
industries have raised fears of spiralling retaliatory responses, but resurgent protectionism
has been restrained thus far. Te most recent joint WTO-OECD-UNCTAD report of
25 October 2011 showed that new import restriction measures taken between May and
mid-October of 2011 afect only 0.6 per cent of total G20 imports, the same proportion
recorded during the prior six months. Restrictive measures mainly afected machinery and
mechanical appliances, iron and steel articles, electrical machinery and equipment, organic
chemicals, plastics and man-made staple fbres. Te incidence is less than that recorded
from October 2008 to October 2009 when trade-restrictive measures peaked, afecting
1.01 per cent of total world imports. However, the report noted that the political will to
resist creeping protectionism appears to be under increasing pressure. Commitments made
by G20 members to roll back export restrictions have not been met. In fact, the number of
export restrictions has continued to increase.
12
12 While the number of export restrictions has increased signi?cantly, from 16 over the period
from September 2009 to mid-October 2010 to 30 from mid-October 2010 to mid-October 2011,
the amount of world trade covered by all restrictions has fallen from 0.8 per cent of total world
imports in the ?rst report of September 2009 to 0.5 per cent in the most recent report. See Reports
on G20 Trade and Investment Measures, issued on 14 September 2009 and 25 October 2011 by
the World Trade Organization (WTO), Organization for Economic Cooperation and Development
(OECD) and UNCTAD.
Protectionist measures in
response to the crisis have
been of low intensity so far
64 World Economic Situation and Prospects 2012
Te institutional function of the WTO to administer multilateral trade rules
and disciplines is pivotal in ensuring that members do not resort to full-blown “beggar-
thy-neighbour” policies. Yet, given the present international economic environment, there
is still a danger that more countries will enhance protectionist measures, especially non-
tarif measures (NTMs), should political emotions dull the memories of the damaging
efects of past “beggar-thy-neighbour” policies and overpower the commitments to and
rationale for a multilateral trading system. Te danger may increase if unemployment rates
remain high and the recovery loses further momentum.
In this context, there is an urgent need to address NTMs. Tere are legitimate
reasons for NTMs, such as the protection of health, safety and the environment, but they
have also been abused as a pretext for protectionism. NTMs therefore pose a major trade
policy challenge. Since 2008, the leaders of G20 countries have repeatedly discussed re-
fraining from NTM use because of their potential for slowing down the positive outcomes
of trade expansion and integration.
13
“Green protectionism” through NTMs has recently
increased. While there are legitimate grounds for environmental protection in support of
sustainable production and consumption, concerns have arisen that such incentives are
forms of trade distortion that cannot be properly challenged in the dispute settlement
mechanism under current WTO trade rules. Hence, multilateral trade rules need further
revision to ensure that the necessary Government support to promote environmental pro-
tection and sustainable production and consumption is provided without undermining
the principles of a fair trading system.
13 See the G20 Cannes Summit Final Declaration of 4 November 2011, para. 65: “At this critical time
for the global economy, it is important to underscore the merits of the multilateral trading system
as a way to avoid protectionism and not turn inward. We rea?rm our standstill commitments until
the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may
have risen, including new export restrictions and WTO-inconsistent measures to stimulate exports
and ask the WTO, OECD and UNCTAD to continue monitoring the situation and to report publicly
on a semi-annual basis.” Available fromhttp://www.g20.org/index.aspx.
NTMs are posing a serious
policy challenge
65 International trade
Appendix
Trade shocks and changes in merchandise trade balance, by region, 2001-2013
Percentage of gross domestic product of the region
Demand shock:
change of export
volume
Terms-of-trade
shock: net value
change
Total
trade shock
Change in
import volume
Net change in
trade balance
World
Average 2001-2007 1.3 0.0 1.3 1.3 0.0
2008 0.9 0.0 0.8 0.8 0.0
2009 -3.4 0.0 -3.3 -3.3 0.0
2010 3.2 0.0 3.2 3.2 0.0
2011
a
1.7 0.1 1.8 1.8 0.0
2012
b
1.0 0.0 1.1 1.1 0.0
2013
b
1.3 0.0 1.4 1.4 0.0
Developed economies
Average 2001-2007 0.8 -0.2 0.5 0.8 -0.3
2008 0.4 -0.7 -0.3 -0.2 -0.1
2009 -3.4 0.7 -2.7 -3.5 0.8
2010 2.4 -0.3 2.1 2.2 -0.1
2011
a
1.2 -0.5 0.7 0.7 0.0
2012
b
0.6 0.1 0.8 0.6 0.1
2013
b
0.9 0.0 1.0 0.8 0.2
Economies in transition
Average 2001-2007 3.6 2.2 5.7 2.9 2.8
2008 1.7 4.7 6.4 1.8 4.5
2009 -4.1 -6.1 -10.1 -5.8 -4.4
2010 3.1 3.0 6.0 2.7 3.4
2011
a
2.3 4.0 6.2 2.3 3.9
2012
b
0.8 -0.8 -0.1 1.4 -1.5
2013
b
1.3 -0.4 1.0 1.5 -0.5
Developing economies
Average 2001-2007 3.1 0.5 3.6 2.7 0.8
2008 2.1 1.1 3.2 1.7 1.5
2009 -3.1 -0.9 -4.0 -2.7 -1.3
2010 4.8 0.6 5.4 4.8 0.6
2011
a
2.7 0.8 3.5 2.0 1.5
2012
b
1.8 -0.1 1.7 2.1 -0.3
2013
b
2.0 0.0 2.1 2.2 -0.1
Least developed countries
Average 2001-2007 3.1 0.5 3.6 2.7 0.8
2008 2.1 1.1 3.2 1.7 1.5
2009 -3.1 -0.9 -4.0 -2.7 -1.3
2010 4.8 0.6 5.4 4.8 0.6
2011
a
2.7 0.8 3.5 2.0 1.5
2012
b
1.8 -0.1 1.7 2.1 -0.3
2013
b
2.0 0.0 2.1 2.2 -0.1
66 World Economic Situation and Prospects 2012
Appendix (cont’d)
Demand shock:
change of export
volume
Terms-of-trade
shock: net value
change
Total
trade shock
Change in
import volume
Net change in
trade balance
East and South Asia
Average 2001-2007 4.9 -0.2 4.7 3.5 1.2
2008 2.6 -0.5 2.1 1.8 0.4
2009 -3.2 1.3 -1.9 -2.2 0.3
2010 7.1 -0.7 6.4 5.9 0.5
2011
a
3.8 -0.2 3.7 2.5 1.1
2012
b
2.5 0.4 2.9 2.3 0.5
2013
b
2.6 0.4 3.0 2.5 0.4
Western Asia
Average 2001-2007 1.2 2.5 3.7 3.1 0.5
2008 4.0 7.3 11.3 2.0 9.3
2009 -5.5 -8.6 -14.1 -3.4 -10.6
2010 1.6 4.1 5.7 2.5 3.2
2011
a
1.3 4.9 6.3 0.4 5.9
2012
b
1.2 -1.2 0.0 2.2 -2.2
2013
b
1.8 -0.4 1.4 1.4 -0.1
Africa
Average 2001-2007 0.7 1.2 1.9 2.7 -0.8
2008 2.5 2.9 5.4 2.1 3.3
2009 -3.6 -3.1 -6.8 -2.8 -3.9
2010 0.9 1.9 2.8 2.1 0.7
2011
a
0.9 1.9 2.8 0.4 2.4
2012
b
0.8 -0.6 0.1 2.1 -2.0
2013
b
1.2 -0.4 0.8 1.3 -0.5
Latin America and the Caribbean
Average 2001-2007 1.0 0.7 1.7 1.0 0.7
2008 -0.1 1.0 0.9 1.4 -0.5
2009 -1.5 -0.8 -2.3 -3.3 1.0
2010 2.1 1.5 3.6 4.0 -0.4
2011
a
1.0 0.9 1.9 1.9 -0.1
2012
b
0.8 -0.6 0.3 1.3 -1.0
2013
b
1.0 -0.5 0.5 1.8 -1.3
Source: UN/DESA World Economic Vulnerability Monitor, based on UN Comtrade and UNCTAD data.
a
Figures for 2011 are partly estimated.
b
Figures for 2012-2013 are projections.
doc_626641611.pdf
The recovery of world trade was as vigorous in 2010 as had been its decline in 2009. It lost a great deal of momentum in 2011, however, with the growth of world trade volume slowing from 12.6 per cent in 2010 to 6.6 per cent.
41
Chapter II
International trade
Slowing merchandise trade
Te recovery of world trade was as vigorous in 2010 as had been its decline in 2009. It lost
a great deal of momentum in 2011, however, with the growth of world trade volume slow-
ing from 12.6 per cent in 2010 to 6.6 per cent. Weaker global economic growth, especially
among developed economies, is the major factor behind the deceleration. As a result, over
the four-year period that started with the sharp deceleration of world trade in 2008, the
level of world import volume has remained well below trend.
1
In the baseline outlook for
2012 and 2013 (see chap. I), global economic activity would falter without going into re-
cession. Even with the possibly optimistic assumptions of the baseline, world trade would
continue to drift further away from the trend (fgure II.1). Against this benchmark, the
volume of world trade would be 30 per cent below the level that might have been reached
had there been no global fnancial crisis.
During the crisis, import volume of developing countries fell to about 13 per cent
below trend, but recovered strongly, to catch up almost fully with the rapidly rising trend
experienced in the early 2000s (fgure II.2). In 2010, developing country import growth
contributed to half of world trade growth (compared with 43 per cent in the pre-crisis
period of 2004-2007). Among developing regions, East and South Asia led the recovery in
1 This refers to the continued linear trend estimated for 2001-2007.
Growth in world trade
decelerated in 2011
with the weakening of
developed economies
Figure II.1
Below-trend growth of world merchandise trade, 2002-2013
15
0
-15
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
a
2012
b
2013
b
100
120
140
160
180
200
220
240
Source: UN/DESA.
a Partly estimated.
b Projections.
World import volume
(left-hand scale)
World gross product
(left-hand scale)
World import
trend (2001-2007)
(right-hand scale)
World import
level (2001=100)
(right-hand scale)
42 World Economic Situation and Prospects 2012
external demand, accounting for about three quarters of the growth of imports of devel-
oping economies in 2010, followed by Latin America and the Caribbean, accounting for
17 per cent; Western Asia and Africa contributed about 7.0 and 2.0 per cent, respectively.
China continues to be the key driver of import growth among developing countries, ac-
counting for 37 per cent of the growth of imports of all developing countries in 2010.
Te below-trend recovery of global trade is almost fully explained by the weak-
er import demand in developed economies. Import demand had declined to 21 per cent
below trend by 2009 and did not catch up thereafter. Te gap is expected to widen further,
to 30 per cent by 2013, in the baseline scenario.
Shifting patterns of merchandise trade
Te marked weakness of import demand from developed countries following the collapse
in 2008-2009 comes on top of a decade-long decline of their predominance in inter-
national trade. Between 1995 and 2010, their value share in world merchandise trade
declined from 69 to 55 per cent, while that of developing countries increased from 29 to
41 per cent (fgure II.3). Over this 15-year period, China’s share alone increased fourfold
from 2.6 per cent to about 10.0 per cent. Over the same period, the market share of Latin
America and the Caribbean increased from 4.5 per cent to 5.9 per cent. Te value of
Africa’s merchandise exports rose from $100 billion in 1995 to $560 billion in 2010, while
its share in world trade improved modestly from 2.0 per cent to 3.2 per cent. World market
penetration of exports from the least developed countries (LDCs), small island developing
States (SIDS) and landlocked developing countries (LLDCs) remains extremely limited.
For example, even though LDC exports have grown over fvefold since 1995, their world
Figure II.2
Diverging trends in world import growth, 2002-2013
100
150
200
250
300
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
a
2012
b
2013
b
Source: UN/DESA.
a Partly estimated.
b Projections.
Import trend,
developing countries
(2001-2007)
Import level,
developing countries
(2001=100)
Import trend,
developed countries
(2001-2007)
Import level,
developed countries
(2001=100)
43 International trade
market share is still less than 1 per cent. World market shares of SIDS and LLDCs amount
to much less than 1 per cent.
Te shifting patterns of trade are associated with the rapid industrial growth
of a range of developing countries. Moving from agricultural and other primary produc-
tion to manufacturing tends to drive up the import intensity of production; moreover,
global trade increasingly involves value chains with diferent geographical locations con-
tributing various parts to the production processes. Such shifting patterns of trade, as
well as the increased demand for primary commodities from the rapidly growing econo-
mies, has strengthened South-South trade (fgure II.4). South-South trade increased at
a rate of 13.7 per cent per year between 1995 and 2010—well above the world average
of 8.7 per cent. Over the same period, the South’s merchandise exports to the North
increased by 9.5 per cent per annum.
While recent import demand in most developing countries has remained vig-
orous, only a few of these countries have succeeded in climbing up the global value chain
and diversifying their export base to cater to markets previously dominated by developed
economies. Indeed, about 83 per cent of the increase in the share of developing countries’
total world trade between 1995 and 2010 (fgure II.3) was accrued by the subset of emerg-
ing economies (the BRICS
2
plus Mexico and the Republic of Korea). East and South Asia
include three of the most dynamic emerging economies—China, India and the Republic
of Korea—accounting for about one third of world exports and two thirds of developing
country exports in 2010. Some of these gains, as noted, result from growing cross-border
specialization involving smaller segments of value chains, which in turn increase trade
shares and the value of shipments, imports and exports (box II.1).
2 Brazil, the Russian Federation, India, China and South Africa.
South-South trade has
expanded rapidly
Figure II.3
Gains and losses in world market shares of merchandise trade
a
0
10
20
30
40
50
60
70
80
Developed
countries
Developing
countries
Economies
in transition China India
Emerging
economies
b
1995
2000
2007
2010
Source: UN/DESA.
a Share of total exports and
imports in total world exports
and world imports.
b Includes Brazil, China, India,
Mexico, the Republic of Korea,
the Russian Federation and
South Africa.
44 World Economic Situation and Prospects 2012
Figure II.4
Developed (North)
a
and developing (South)
a
economies,
bilateral shares in world exports, 1995 and 2010
1995
2010
0
10
20
30
40
50
60
North-North North-South
b
South-North
c
South-South
Source: UNCTAD secretariat
calculations, based on
UN Comtrade, available fromhttp://comtrade.un.org/db/.
a Developed economies
(North) and developing
economies (South) are based
on the UN/UNCTAD
country classifcation.
b Exports from North
to South.
c Exports from South
to North.
Maritime transportation underpinning
the growing role of the South in world trade
Maritime transport handles over 80 per cent of the volume of global trade and accounts for over
70 per cent of its value. Since 1970, global seaborne trade has expanded on average by 3.1 per cent
every year, reaching an estimated 8.4 billion tons in 2010. At this pace, and assuming no major up-
heaval in the world economy, global seaborne trade is expected to increase by 36 per cent in 2020
and to double by 2033. While bulk trade accounts for the largest share of global seaborne trade by
volume, the containerized cargo contribution grew more than threefold between 1985 and 2010.
Developing countries are driving growth in global merchandise trade, with South-
South links emerging strongly. Africa and Latin America are increasingly becoming suppliers of
China’s primary commodity needs and, in return, China’s consumer goods are being exported more
and more to these regions. These developments are shaping the confguration of maritime transpor-
tation. Figure A illustrates the changing position of developing countries in global seaborne trade
between 1970 and 2010. The share in unloaded goods grew from 18 to 56 per cent, mainly owing
to rising import volumes. As shown in fgure B, Asia’s share of unloaded goods increased from 6.4 to
45.9 per cent over the same period, confrming Asia’s increasing share of world trade.
Uncertainties in the global supply of shipping capacity
In 2010, deliveries of new vessels reached a 36-year record high, increasing the world’s maritime car-
rying capacity by 11.7 per cent. The surge in deliveries following the deep economic downturn and
trade collapse of 2009 refects the prevailing time lag between orders and deliveries inherent in the
shipbuilding industry. The massive order book of 2008, placed when the world economy and trade
were booming, led to record ship deliveries in 2010 following the fragile recovery.
Box II.1
45 International trade
Box II.1 (cont’d)
Figure A
Share of developing countries in world volume of goods,
loaded and unloaded, 1970, 1980, 1990, 2000 and 2010
Percentage of world total, tons
0
10
20
30
40
50
60
70
1970 1980 1990 2000 2010
Goods loaded Goods unloaded
Source: UNCTAD, Review of
Maritime Transport,
various issues, Geneva.
Source: UNCTAD, Review of
Maritime Transport,
various issues, Geneva.
Figure B
Share of world volume of goods, loaded and unloaded,
by developing regions, 1970 and 2010
Percentage of world total, tons
Goods loaded Goods unloaded
0
5
10
15
20
25
30
35
40
45
50
Africa Asia
Latin America
and the
Caribbean Africa Asia
Latin America
and the
Caribbean
1970 2010
46 World Economic Situation and Prospects 2012
For example, as shown in fgure II.5, the share of intraregional trade within
the Association of Southeast Asian Nations (ASEAN) as a proportion of ASEAN trade
with the rest of the world increased by 2.4 percentage points (from 21.4 to 23.8 per cent)
between 2002 and 2010. Meanwhile, the share of total ASEAN trade with China, Japan
and the Republic of Korea increased from 26.7 to 29.8 per cent.
3
As a result, in 2010,
trade within this broader region accounted for more than half of the value of total ASEAN
goods traded worldwide.
Te trade gains from such regional trade are unevenly distributed, however.
While the share of the Republic of Korea in total ASEAN trade remained constant, at
about 4.6 per cent, that of China doubled to reach 14.3 per cent, mostly at the expense
of the share of Japan. It would thus seem that regional trade agreements are not the only
driving force behind strengthened intraregional trade; much is likely associated with the
reshaping of world trade by global production chains.
3 ASEAN and the three countries mentioned in the text agreed to strengthen economic ties in
1997. This broader regional cooperation is sometimes referred to as ASEAN Plus Three (ASEAN+3
or APT).
In the next few years, analysts forecast a continued oversupply of deliveries in the dry
bulk and container sectors. Moreover, some indicators hint at the continued expansion of shipyard
capacities in countries such as China and the Republic of Korea well beyond current market require-
ments. On the one hand, the current imbalance in ship carrying-capacity strongly challenges the
shipping industry, as oversupply exerts a dampening efect on freight rates and revenues. Increased
ship sizes pose a further challenge to owners, who need to fnd ever-larger shipments of cargo to
achieve the economies of scale required to operate these larger ships with a proft. On the other
hand, this may be good news for importers and exporters, as there should be no lack of afordable
shipping capacity to carry the moderate revival of world trade expected for 2012.
Investing in seaports and trade infrastructure as a counter-cyclical strategy
Mirroring growth on the demand and supply sides, world container port throughput increased by an
estimated 12.6 per cent, to 528.8 million twenty-foot equivalent units (TEUs), in 2010 after stumbling
briefy in 2009. Forecasts for 2011 and 2012 are for continued double-digit growth, strengthened by
the resumption of many port expansion projects put on hold during the economic downturn.
Keeping in mind the long-term requirements for a country’s foreign trade expansion
and the fact that a decline in transport investment today will inevitably entail future capacity re-
strictions on trade, transport infrastructure investments should be seen as a counter-cyclical policy
option with the advantage of contributing to fostering long-term growth through trade.
The expansion of maritime trade is accompanied by the opportunity for operational
economies of scale. Indeed, the technological developments required for the efcient management
of port services and infrastructure have also encouraged the construction of increasingly larger ships.
In this rapidly changing environment, transport connectivity seems key in determining the extent to
which cost savings derived from economies of scale are passed on to importers and exporters. The
resulting improvements in competitiveness are critical to ensuring a country’s efective integration
into global trading networks. However, as developing countries strive for improved infrastructure
capacity, they will be confronted with increasing concentration of shipping services. Recently, the
United Nations Conference on Trade and Development (UNCTAD) found that 35 coastal countries
were served by only three or fewer liner companies in 2011.
a
In other words, the consolidation of
services provided by the container shipping industry to achieve improved operational efciency may
also have reduced negotiating powers for some players and resulted in less overall market efciency
in some market segments.
Box II.1 (cont’d)
a UNCTAD, Review of
Maritime Transport 2011
(United Nations publication,
forthcoming).
47 International trade
Volatile terms of trade
Trade afects national income through three factors: prices of exports, prices of imports
and the volume of demand.
4
Te international terms of trade (defned as the ratio of the
average export price and import price indices) provide a synthetic measure of relative
price changes over time. Preliminary estimates for 2011, suggest that the terms of trade
of mineral- and oil-exporting economies have continued their rebound from the export
price collapse in 2009 (fgure II.6).
5
In contrast, the terms of trade for economies relying
on manufactured exports have deteriorated on average. Exporters of minerals, including
oil, have seen dramatically large price shocks since 2007. Yet, world market prices for
those commodities seem to be on a longer term upward trend (see below). In 2011, min-
eral exporters experienced strongly improved terms of trade, in part since prices of some
precious metals increased sharply because heightened global economic uncertainty raised
their importance as a store of value.
Regional aggregates of the combined shocks caused by the changes in the terms
of trade and in the volume of export and import demand are shown in fgure II.7A, and
4 These factors can be calculated, with some degree of accuracy, by combining information
from UN Comtrade (import and export structure), the United Nations Conference on Trade and
Development (UNCTAD) and other sources (international prices), and the Central Planning Bureau
of the Netherlands (CPB) and other sources (volume changes of imports and exports). See also
Alex Izurieta and Rob Vos, “Measuring the impact of the global shocks on trade balances via price
and demand e?ects”, World Economic Vulnerability Monitor, Methodological Notes, available fromhttp://www.un.org/en/development/desa/policy/publications/wevm/monitor_note.pdf.
5 Estimates for 2011 are extrapolations from observed data covering the ?rst nine months of the
year. The forecasts for 2012 and 2013 are based on trade volume and commodity prices implied by
the baseline scenario for global trade and output growth presented in chapter I.
Terms of trade have
improved for mineral and
oil exporters
Primary commodity
exporting countries are
facing the biggest trade
shocks
Figure II.5
Shifting total trade market shares in Asia, 2002-2010
0
5
10
15
20
25
30
35
2002
ASEAN trade with China, Japan and Republic of Korea
Intra-ASEAN trade
ASEAN trade with Japan
ASEAN trade with China
ASEAN trade with Republic of Korea
2003 2004 2005 2006 2007 2008 2009 2010
Percentage share of each category over total ASEAN trade with the world
Source: UN/DESA, based on
data from the International
Trade Center.
Note: Some values for
2005-2007 are interpolated
from values in 2004 and 2008.
48 World Economic Situation and Prospects 2012
trade shocks by country groupings, according to export specialization, in fgure II.7B.
6
All regions faced negative trade shocks in 2009, followed by a turnaround
during the global economic recovery of 2010-2011. Te adverse shock of 2009 was mainly
caused by the massive contraction of global demand (more than 3 per cent of world in-
come), but in part also by the collapse in commodity prices. Te trade shocks were strong-
est among the economies in transition and countries in Western Asia and Africa. Because
of the sharp fuctuations in energy and other commodity prices, energy exporters faced the
strongest trade shocks, followed by mineral exporters. Agricultural exporters sufered less
dramatic trade shocks, in part because many of them are net energy importers and hence
see commodity price shocks that afect both sides of their external balances. For similar
reasons, most LDCs have not seen comparably strong terms of trade shocks, despite the
large swings in commodity prices. LDCs consist of a heterogeneous group of economies,
encompassing a wide range of export specializations, from energy and minerals to agri-
cultural and manufacturing exporters. Given the variety of export structures, LDCs, as a
group, resemble an “export-diversifed” economy on average, but individual countries have
faced large shocks because of their skewed export base and/or high dependence on food
and energy imports.
Economies with more diversifed export specialization have faced milder trade
shocks over the past three years and also have more stable export revenues and levels of
import demand, enabling more stable output growth. A similar pattern is observed for
6 The ?gures show the total trade shock estimated as the change in export prices times the volume
of the previous year’s exports, minus the change in import prices times the volume of last year’s
imports, plus changes in the volume of import demand times the price of last year’s imports. The
table in the appendix to the present chapter provides a breakdown of the components of the
trade shock.
Countries with diversi?ed
exports or those specialized in
manufactures have been less
vulnerable to trade shocks
Figure II.6
Barter terms of trade of selected groups of countries, by export structure, 2000-2013
Index: 2000=100
60
80
100
120
140
160
180
200
220
240
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Oil exporters
Exporters of minerals and other mining products
Exporters of agricultural products
Exporters of manufactures
Sources: UNCTADStat and
UN/DESA World Economic
Vulnerability Monitor
(WEVUM).
49 International trade
countries specializing in manufactured exports, which, although having sufered a decline
in their terms of trade, have also seen steady demand growth for their exports.
In the outlook for 2012 and 2013, trade shocks are forecast to be mild when
measured as annual averages. Trade volumes are expected to show moderately positive
growth in the baseline scenario, while most commodity prices, except those of some min-
erals, especially precious metals, are assumed to experience corrections from the sharp
increases witnessed during 2010 and the frst half of 2011.
Figure II.7
Trade shocks by region and export specialization, 2001-2013
(percentage of GDP of the group as a whole)
A. By region
W
o
r
l
d
D
e
v
e
l
o
p
e
d
e
c
o
n
o
m
i
e
s
E
c
o
n
o
m
i
e
s
i
n
t
r
a
n
s
i
t
i
o
n
L
a
t
i
n
A
m
e
r
i
c
a
a
n
d
t
h
e
C
a
r
i
b
b
e
a
n
W
e
s
t
e
r
n
A
s
i
a
E
a
s
t
a
n
d
S
o
u
t
h
A
s
i
a
A
f
r
i
c
a
L
e
a
s
t
d
e
v
e
l
o
p
e
d
c
o
u
n
t
r
i
e
s
15
12
9
6
3
0
-3
-6
-9
-12
-15
B. By main sector of export specialization
W
h
o
l
e
r
e
g
i
o
n
(
W
)
E
n
e
r
g
y
(
>
4
0
p
e
r
c
e
n
t
)
M
i
n
e
r
a
l
s
(
>
4
0
p
e
r
c
e
n
t
)
A
g
r
i
c
u
l
t
u
r
e
(
>
4
0
p
e
r
c
e
n
t
)
M
a
n
u
f
a
c
t
u
r
e
(
>
5
0
p
e
r
c
e
n
t
)
D
i
v
e
r
s
i
f
e
d
15
12
9
6
3
0
-3
-6
-9
-12
-15
2001-2007
2008
2009
2010-2011
a
2012-2013
b
Source: UN/DESA World
Economic Vulnerability
Monitor (WEVUM).
a Partly estimated.
b Projections.
50 World Economic Situation and Prospects 2012
Unstable commodity markets
Primary commodity prices boomed from 2003 to mid-2008, constituting the longest
rally of the post-Second World War period and following almost three decades of low,
albeit volatile, prices. Te boom came to an abrupt end with the global fnancial crisis.
Commodity prices collapsed with the fall in global demand, exacerbated by a drop in in-
vestments in commodity derivatives due to fnancial sector deleveraging. Prices rebounded
strongly from the second quarter of 2009 in line with the global recovery, but in particular
with the resumption of robust growth in emerging and other developing countries (fg-
ure II.8). Te upward cycle continued for all major commodity groups until the middle of
2011. In the case of metals, agricultural raw materials and tropical beverages, average price
levels for the year 2011 as a whole in fact surpassed 2008 averages.
Te rebound in commodity prices can be explained in part by the “pincer
efect” of a tightening market caused by supply constraints and continuously growing de-
mand for commodities, especially from emerging economies. Insufcient investments in
oil production and refnery capacity, along with supply shocks caused by, inter alia, the
political unrest in the Middle East and North Africa, have constrained oil markets. In the
case of food and agricultural markets, a variety of factors have held back supply and kept
markets tight, including adverse weather patterns caused by greater climatic variability, de-
clining productivity growth in some regions, low levels of inventories, and increasing scar-
city of arable farmland and water. Measures in recent years by Governments in a number
of countries, including export restrictions and subsidies on the use of food crops for biofuel
production, have further increased scarcity in the markets for food crops in particular.
The rebound in commodity
prices continued upwards
until mid-2011
Slow supply expansion and
rising demand have
pushed up prices
Figure II.8
Total non-oil commodity price index, 2000-2011
a
Index: 2000=100
Dollar
Special Drawing Rights
50
100
150
200
250
300
350
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
Source: UNCTAD.
a Average of the
frst nine months.
51 International trade
Financial factors have had a visible impact on recent commodity price trends
and volatility. Te longer term trend towards a depreciating United States dollar has exac-
erbated the upward trend in commodity prices, since most commodity trade is in dollars
and traders demand higher prices in order not to lose revenue because of the exchange-rate
efect. Weak regulation of fnancial derivatives markets and policies of keeping interest
rates low have pushed massive fnancial investments into speculative trading in buoyant
commodity futures markets.
7
Tis is assessed to have increased price volatility as well as
to have inserted an upward bias in spot prices.
8
Te annual number of commodity futures
contracts traded globally has risen from 418 million in 2001 to 2.6 trillion in 2011, with a
more than 14-fold increase in notional value, to $13 trillion.
9
Te dramatic rise in the vol-
ume of transactions by large fnancial actors has been suggested as a plausible explanation
for the disconnection between price movements and market fundamentals. Consequently,
the issue has attracted the growing attention of the international community, including
the Group of Twenty (G20) and the larger arena of the United Nations General Assembly
(box II.2).
Food and agricultural commodities
After sliding considerably in the frst half of 2010, the agricultural commodity price indices
of the United Nations Conference on Trade and Development (UNCTAD) rose sharply,
reaching peaks around February 2011 (fgure II.9). Despite subsequent falls, prices remain
comparatively high. Te food price index averaged 268 points from January to September
2011, up 21.8 per cent from the same period in 2010. Within this category, the average
price of the main cereals (wheat, maize and rice) has continued its upward movement,
although rising at a slower pace than in the previous year. Meat, vegetable oils and sugar
prices have also been on the rise.
Te impact on net food-importing countries has been considerable, but vari-
able. For example, the Horn of Africa was hit by famine following prolonged drought,
compounded by confict and insecurity, while other countries in Africa enjoyed good
harvests of maize and sorghum. In developing Asia, in particular, rising prices for wheat,
edible oil and other food items have been a major factor in accelerating headline infa-
tion. Where food price increases were contained by food subsidies, they have given rise to
widening fscal defcits, as was the case in Western Asia.
Te outlook for wheat crops in 2012 is uncertain. Increased production projec-
tions for the European Union (EU) and the Commonwealth of Independent States (CIS),
7 The deregulation of United States exchanges in 2000 allowed index investors to be considered
“commercial” market participants, thereby exempting them from certain regulatory obligations.
For instance, investments in futures markets can be treated as “over-the-counter”(OTC) derivatives,
not listed in the exchanges. The OTC market involves trading derivatives directly between two
parties, where there is a risk that one party may default. In exchange trading, all parties must place
collateral (called a “margin”) against their positions held at the exchange. Margin calls are required
by the exchange whenever the collateral of any trading agent falls short of the margin required to
hold their positions. Positions are immediately liquidated if the margin call is not met. This reduces
risk-taking and the risk of default.
8 See World Economic Situation and Prospects 2011 (United Nations publication, Sales No. E. 11.II.C.2),
box II.1, pp. 53-54; and UNCTAD, Trade and Development Report 2011: Post-crisis policy challenges in
the world economy (United Nations publication, Sales No. E.11.II.D.3), chap. V.
9 UNCTAD projections based on Bank for International Settlements statistics (see UNCTAD,
Commodities and Development Report 2012: Commodities in the twenty-?rst century: Perennial
problems, new challenges, which way forward? (United Nations publication, forthcoming).
Financial variables are
increasingly in?uencing
commodity prices
Food prices peaked
in early 2011
The impact on net food-
importing countries has
been considerable
52 World Economic Situation and Prospects 2012
Commodity market volatility and fnancialization
reaches the international policy agenda
Major shifts in commodity market supply and demand balances have occurred over the past
few years. However, these shifts alone are insufcient explanation of the rapid increase in price
volatility afecting a wide range of commodities over the last half decade. Recent research and
analyses increasingly support the view that the greater involvement of fnancial investors and their
increased investments in commodities as fnancial assets have altered the functioning of commod-
ity markets.
a
The adverse impact of food price volatility on the livelihood of millions of poor house-
holds and the potential infationary efects of high food and energy prices have placed commodity
price issues back on the international policy agenda. In response to these concerns, the G20 iden-
tifed food security as a priority area for the frst time in the November 2010 Seoul Development
Consensus for Shared Growth. During the Ministerial Meeting on Development in Washington, D.C.,
in September 2011, the work of the G20 in this area culminated in the endorsement of the Action
Plan on Food Price Volatility and Agriculture to which Agriculture Ministers had agreed earlier in
Paris in June 2011.
b
This policy-oriented Action Plan emphasizes the need for enhanced agricultural
productivity and greater market transparency, while encouraging market participants to make better
use of commodity price risk management tools.
Taking a broader approach, the G20 Study Group on Commodities endorsed an analyti-
cally oriented report in November 2011. This report examines the determinants of recent commodity
price volatility, including the changing nature of commodity-related fnancial instruments and market
participants, in order to shed light on their growing infuence on commodity price developments.
c
It
argues that fnancial investors can cause commodity prices to deviate from fundamental values when
their investment is large and when they engage in herd behaviour. Herding occurs when market
participants extrapolate from past price movements or mimic other traders’ position-taking without
looking at market fundamentals.
d
While the report acknowledges the existence of conficting em-
pirical evidence of a persistent impact of fnancial investors on the level, volatility and correlation of
commodity prices, it also recognizes the growing research supporting the view that recent fnancial
investments have decisively afected price dynamics over short time horizons; furthermore, it fnds
that some episodes of large and sudden price movements support the common-sense hypothesis
that amplifcation mechanisms existing in other fnancial markets are also at work in commodities fu-
tures and options markets. Subsequently, at the Cannes Summit in November 2011, the G20 endorsed
a report on commodity derivatives markets, prepared by the International Organization of Securities
Commissions (IOSCO), calling for more stringent regulation and enhancing the intervention power of
market authorities to ensure that commodity derivatives markets fulfl their function as price-discov-
ery and risk-transfer mechanisms.
e
Although these recommendations have a similar thrust, they are
less ambitious than the regulations that the U.S. Commodity Futures Trading Commission (CFTC) and
the European Commission propose to implement in the United States of America and the European
Union, respectively, over the next two years.
Partly as a result of the sequence in which the various reports on commodity price
developments have become available, the recent analytical fndings and regulatory recommenda-
tions are thus far refected in G20 policy statements only to a limited extent. However, the continued
salience of commodity price issues may lead the G20 to deepen its approach and translate these
fndings and recommendations into tangible and internationally harmonized policy actions.
In addition, the growing consensus that heightened commodity price volatility afects
food security and sustainable development, in particular in commodity-dependent countries, has
triggered a deepening debate extending beyond the perceived scope of G20 engagement. Non-
members of the G20 are increasingly contributing to this debate with their own initiatives. The draft
resolution on addressing excessive price volatility in food and related fnancial and commodity
markets, initially tabled by the Group of 77 and China could, if adopted by the General Assembly
in December 2011, represent an important step in addressing this issue under the global and repre-
sentative umbrella of the United Nations.
Box II.2
a For a review of such
studies and further analysis
of the interplay between
physical and fnancial
commodity markets,
see UNCTAD, Trade and
Development Report 2011:
Post-crisis policy challenges in
the world economy (United
Nations publication, Sales
No. E.11.II.D.3), chap. V.
b Seehttp://agriculture.
gouv.fr/IMG/pdf/2011-06-
23_-_Action_Plan_-_
VFinale.pdf.
c The report is available fromhttp://www.g20.org/exp_01.
aspx..
d See UNCTAD, Trade and
Development Report 2011,
op. cit., for further analysis.
e See International
Organization of Securities
Commissions (IOSCO),
“Principles for the
Regulation and Supervision
of Commodity Derivatives
Markets”, September 2011.
Available fromhttp://www.
iosco.org/library/pubdocs/
pdf/IOSCOPD358.pdf.
53 International trade
together with competitive prices relative to maize, may continue to encourage the use of
wheat for livestock feed, which could push up prices. Te sugar price may continue its rise
in 2012, underscored by higher projected world demand for refned sugar in the light of
anticipated market defcits. Te tropical beverages price index, which has risen steadily
since December 2010, may show moderation as a result of better-than-expected supply
conditions. Te vegetable oilseeds and oil price index has declined from its all-time high
of February 2011, but price volatility may continue amidst uncertain supply and demand
prospects in major oilseed-producing and -importing countries.
Te average price index for agricultural raw materials increased by 91 points
over the frst three quarters of 2011 compared with the same period in 2010, mostly as
a result of supply shortfalls generated by adverse weather conditions and strong demand
in Asian emerging economies. Natural rubber prices remained high in 2011 owing to
strong demand for tyres in emerging market economies and high energy costs (especially
crude oil) which afected synthetic rubber prices. Supply disruptions from poor weather
conditions in major producing countries also contributed to increased prices. Tis pattern
was evident for cotton, too, which reached a historic high in March 2011 ($2.3 per lb), up
63 per cent from its 2009 average.
Minerals, ores and metals
Te average UNCTAD price index for minerals, ores and metals, calculated from January
to September 2011, increased by 21 per cent compared with the same period in 2010
(fgure II.10). Metal prices remained high over this period owing to a combination of
tightening supply and strong industrial demand from Asian countries and Brazil.
Prices of metals have
increased and are expected
to rise further in 2012
Figure II.9
Price indices of commodity groups, January 2000-September 2011
Tropical beverages
Minerals, ores and metals
Food
Agricultural raw materials
Price index—all groups (in terms of current dollars)
50
100
150
200
250
300
350
400
450
J
a
n
-
2
0
0
0
J
a
n
-
2
0
0
1
J
a
n
-
2
0
0
2
J
a
n
-
2
0
0
3
J
a
n
-
2
0
0
4
J
a
n
-
2
0
0
5
J
a
n
-
2
0
0
6
J
a
n
-
2
0
0
7
J
a
n
-
2
0
0
8
J
a
n
-
2
0
0
9
J
a
n
-
2
0
1
0
J
a
n
-
2
0
1
1
Index: 2000=100
Source: UNCTAD.
54 World Economic Situation and Prospects 2012
Over the next few years, the slow expansion of supply in the mining sector,
coupled with an already challenging situation in upgrading mining capacity, is set to tight-
en supply further, likely resulting in rising metal prices in the medium term. According
to the International Copper Study Group (ICSG), the growth in global copper demand is
expected to outstrip copper production before the end of 2011 causing a production defcit
of about 160,000 tonnes of refned copper.
Gold continues to serve as a safe store of wealth during times of uncertainty
or exchange-rate volatility. Between January and December 2009, gold prices rose by
32 per cent, and yet again by 24 per cent from January to December 2010. By September
2011, the monthly average gold price set a new record of $1,772 an ounce, as investors took
refuge following weaker-than-expected recovery in both the United States of America and
Europe, coupled with perceived sovereign debt problems on both sides of the Atlantic.
The oil market
During the frst three quarters of 2011, global oil demand increased by 1.2 per cent
compared to the same period in 2010. Oil demand in developed countries declined by
0.7 per cent as their economies weakened. Tis decline was ofset by strong demand for
oil from emerging market and developing countries, up by 3.4 per cent in 2010, pushed
by robust economic growth, particularly in China and India. Non-Organization for
Economic Cooperation and Development (OECD) countries commanded an estimated
48.7 per cent of global oil demand in 2011.
World oil supply increased by 1.2 per cent during the frst three quarters of
2011. Production in the member States of the Organization of the Petroleum Exporting
Oil prices increased
moderately as demand
from emerging economies
grew, while OECD
demand slackened
Figure II.10
Price indices of non-ferrous metals, January 2007-September 2011
Aluminium
Copper
Lead
Zinc
Nickel
J
a
n
-
2
0
0
7
A
p
r
-
2
0
0
7
J
u
l
-
2
0
0
7
O
c
t
-
2
0
0
7
J
a
n
-
2
0
0
8
A
p
r
-
2
0
0
8
J
u
l
-
2
0
0
8
O
c
t
-
2
0
0
8
J
a
n
-
2
0
0
9
A
p
r
-
2
0
0
9
J
u
l
-
2
0
0
9
O
c
t
-
2
0
0
9
J
a
n
-
2
0
1
0
A
p
r
-
2
0
1
0
J
u
l
-
2
0
1
0
O
c
t
-
2
0
1
0
J
a
n
-
2
0
1
1
A
p
r
-
2
0
1
1
J
u
l
-
2
0
1
1
Index: 2000=100
100
0
200
300
400
500
600
700
800
900
Source: UNCTAD.
55 International trade
Countries (OPEC) increased by 2.7 per cent. Saudi Arabia has activated its spare capacity
and raised its supply by 1.4 million barrels per day (mbd), to reach 9.4 mbd in the third
quarter to compensate for the production loss in Libya. Meanwhile, oil supply by non-
OPEC countries, which represents two thirds of world production, is estimated to have
increased by 0.1 per cent owing to slowing production in OECD countries.
Oil stocks in the OECD countries decreased slightly in the frst half of 2011.
Furthermore, on 23 June, the International Energy Agency (IEA) decided to release 60 mb
of strategic stocks in a coordinated manner over a 30-day period.
During the frst ten months of 2011, oil traded at about 40 per cent above the
average price of 2010. Te Brent oil price averaged $112 per barrel (pb), compared with
$79 pb for 2010 as a whole. A price hike occurred after the frst of the Arab uprisings in
Tunisia on 18 December 2010; it intensifed as political unrest spread across North Africa
and Western Asia. Speculation in oil futures markets about possible supply shortages be-
cause of the political unrest pushed up oil prices long before production facilities in Libya
were actually afected and despite the fact that supply outages were fully compensated for
by the activation of Saudi spare capacity. Te Brent oil price peaked at $126 pb in mid-
and end-April before stabilizing at around $110 pb. Te coordinated release of strategic
stocks by IEA members failed to appease fears of supply shortages; the Brent price did not
fall below $100 pb until October 2011, and only did so for a very short time.
Furthermore, Brent oil has been trading at an increased premium compared to
other crudes, especially West Texas Intermediate (WTI) crude (fgure II.11A). A number
of factors are thought to explain the widening spread. On the supply side, infrastructure
constraints, including constraints in pipelines and access to storage facilities at the deliv-
ery point of North American crudes in Oklahoma have led to a build-up of inventories.
Additionally, Brent production in the mature North Sea felds is slowing down. Tese two
phenomena are not new, however. Other explanations point to specifc demand factors and
the role of fnancial speculation. Indeed, as most of Libya’s oil is exported to Europe, the
outage in supply caused by the war translated into acute demand pressures on Brent, which
is chemically one of the closest substitutes for light sweet crudes from Libya. Rumours that
the European downstream industry might not be able to process similar quantities of
more heavy crudes in the short run subsequently nurtured fears that oil shipment patterns
would need to be rerouted. Tese fears further aroused the interest of fnancial speculators,
causing a surge of 32 per cent (year on year) in Brent open interests between January and
September, compared with 2 per cent in WTI open interest.
10
During the frst three quarters of 2011, oil price volatility also increased. Brent
oil prices, in particular, registered larger swings than in 2010 (fgure II.11B). Tis has in-
creased the cost of hedging for buyers and sellers engaged in the physical oil trade. Several
studies suggest that the fnancialization of commodity markets has shaped the process of
price formation in spot markets, and a more stringent regulation of these markets is called
for (box II.2). However, the debate is not settled and is likely to remain controversial,
especially considering the huge vested interests of the fnancial players.
In the outlook for 2012, global oil demand is assumed to increase by
1.6 per cent, to 90.6 mbd. Demand from non-OECD countries, mainly driven by eco-
nomic growth in China and India, is expected to rise by 3.7 per cent on the back of ex-
panding industrial production and private energy consumption. Among OECD member
10 Open interest is the total number of derivative contracts not settled in the immediately preceding
period for a speci?c underlying security. A large open interest indicates more activity and liquidity
for the contract.
Political instability and fears
of supply shortages kept
prices high during
most of 2011
Financialization of
commodity markets has
ampli?ed price swings
in spot markets
Oil demand is expected to
rise moderately in 2012,
driven by demand from
developing countries
56 World Economic Situation and Prospects 2012
Source: UN/DESA, based on data from the United States Energy Information Administration, available fromhttp://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm.
Figure II.11
Oil prices
J
a
n
-
2
0
1
0
D
o
l
l
a
r
s
p
e
r
b
a
r
r
e
l
F
e
b
-
2
0
1
0
M
a
r
-
2
0
1
0
A
p
r
-
2
0
1
0
M
a
y
-
2
0
1
0
J
u
n
-
2
0
1
0
J
u
l
-
2
0
1
0
A
u
g
-
2
0
1
0
S
e
p
-
2
0
1
0
O
c
t
-
2
0
1
0
J
a
n
-
2
0
1
1
F
e
b
-
2
0
1
1
M
a
r
-
2
0
1
1
A
p
r
-
2
0
1
1
M
a
y
-
2
0
1
1
J
u
n
-
2
0
1
1
J
u
l
-
2
0
1
1
A
u
g
-
2
0
1
1
S
e
p
-
2
0
1
1
O
c
t
-
2
0
1
1
N
o
v
-
2
0
1
0
D
e
c
-
2
0
1
0
A. Widening spread between Brent and WTI spot prices (daily prices), 2010-2011
Brent
West Texas Intermediate (WTI)
60
70
80
90
100
110
120
130
J
u
l
-
1
9
8
7
J
u
l
-
1
9
8
9
J
u
l
-
1
9
9
1
J
u
l
-
1
9
9
3
J
u
l
-
1
9
9
5
J
u
l
-
1
9
9
7
J
u
l
-
1
9
9
9
J
u
l
-
2
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l
-
2
0
0
3
J
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l
-
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0
5
J
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-
2
0
0
7
J
u
l
-
2
0
0
9
J
u
l
-
2
0
1
1
B. Increasing Brent price volatility (daily prices), 1987-2011
Absolute volatility (rebased)
Spot price (dollars per barrel)
0
20
40
60
80
100
120
140
160
180
200
57 International trade
States, demand is projected to remain at the 2011 level. On the supply side, non-OPEC
countries are expected to post an increase in output of 1.8 per cent in 2012, to 53.7 mbd,
driven by non-OECD producers such as the Russian Federation, Brazil and newcomer
Ghana. Supply in OECD countries, which provide about 35 per cent of non-OPEC out-
put, will rise by 1.6 per cent as the exploitation of Canadian tar sands is expanding. Many
Gulf countries will likely seek to enhance oil revenues to fund increased social spending
resulting from measures announced in the wake of political unrest spreading across the
Middle East. Consequently, output from OPEC countries is expected to increase unless
oil prices stay up. Setting aside the uncertain infuence of fnancial speculation, the Brent
price is forecast to average $100 pb in 2012. Market conditions will be characterized on
the supply side by a tightening of spare capacity among OPEC producers as well as by
a restocking of strategic oil reserves, while global demand will continue to be driven by
developing countries, especially those in Asia. Te outlook is subject to signifcant uncer-
tainty, however. Weaker-than-expected global economic activity could create signifcant
downward pressure on oil prices, while a revival of political unrest in Gulf countries or
a stronger depreciation of the value of the dollar could trigger renewed price hikes. In
addition, in the context of low interest rates in major fnancial markets, more specula-
tive capital could be attracted to commodity markets in search of higher yields, possibly
exacerbating oil price volatility.
Growing trade in services
In 2010, services trade returned to positive growth in all regions and groups of coun-
tries, especially developing countries, the least developed amongst them in particular.
Nonetheless, the level of world trade in services has not yet fully recovered from the
downturn caused by the global fnancial crisis, mainly because of the sluggish recovery of
such trade in the developed countries and economies in transition. In all regions, growth
in services trade is lagging behind its pre-crisis pace (fgure II.12A and B). Unlike mer-
chandise trade, however, services trade has shown less sensitivity to the global demand
shock triggered by the fnancial crisis. As a corollary, the rebound in trade in services was
also less pronounced during the recovery from the crisis. International tourism services
experienced similar patterns (box II.3).
As a result of diverging growth, the share of developing countries in world
services trade has increased notably, essentially at the expense of developed countries.
Despite fast growth of their tradable services industry, the share of LDCs has remained
almost constant since their initial level of services trade was very low.
Te major services exporters among developing and transition economies
further improved their overall ranking in the world’s top 10 between 2006 and 2010
(table II.1). China, which is both the largest importer and exporter of services among
developing countries and transition economies, moved from the eighth to the fourth posi-
tion in terms of exports, and from the sixth to the third position in terms of imports. In
the top 10 for developing countries and economies in transition, 8 of the top exporters also
rank among the top 10 importers. While their share in world trade in services is growing,
most developing countries and economies in transition continue to run a defcit on their
internationally traded services balance.
World trade in services
has been more stable than
merchandise trade
58 World Economic Situation and Prospects 2012
A. Exports of services (annual growth rates)
-20
-15
-10
-5
0
5
10
15
20
25
30
2006 2007 2008 2009 2010
B. Imports of services (annual growth rates)
2006 2007 2008 2009 2010
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
Source: UN/DESA.
Figure II.12
International trade in services
World
Developing economies
Economies in transition
Developed economies
Least developed countries
59 International trade
International tourism
Rebounding tourism
In 2010, world tourism rebounded from the recession induced by the fnancial crisis. Worldwide,
international tourist arrivals reached 940 million in 2010, up 6.6 per cent over the previous year. The
majority of destinations reported positive and often double-digit increases, sufcient to surpass
pre-crisis peak levels or bring them close thereto. Recovery was stronger in developing economies,
showing a growth rate of 8 per cent, compared to 5 per cent in developed countries that have not
yet fully recovered from a greater fall in 2009 (with Europe following a slightly diferent pattern as
weather and geological shocks caused some travel restrictions during 2010).
Receipts earned from international tourism by destination countries are registered
as services exports (travel credits) in the balance of payments. Worldwide, receipts increased by
5.4 per cent in real terms, reaching a value of $926 billion in 2010. Throughout 2009, international
tourism was more resilient than other trade categories, decreasing only by 5.5 per cent in real terms,
while overall exports decreased by 10.7 per cent. Besides travel-related fnancial services, tourism
also generates export earnings through international passenger transport. As the latter amounted to
$174 billion in 2010, total tourism receipts reached $1.1 trillion in 2010. Travel and passenger transport
exports account for 30 per cent of the world’s exports of commercial services and 6 per cent of
overall exports of goods and services. As a worldwide export category, tourism ranks fourth after
fuels, chemicals and food, while ranking frst in many developing countries (see fgure).
In the frst eight months of 2011, international tourist arrivals grew robustly, by
4.5 per cent. Europe, with 6 per cent growth, was the region showing the strongest growth, which
may seem surprising considering the continued economic uncertainty. Northern Europe, Central and
Eastern Europe, and Southern Europe grew by 7 per cent or more in 2011, following a milder recovery
in the previous year. Furthermore, Mediterranean destinations benefted from the shift of travel away
from the Middle East and North Africa, which fell by 9 and 15 per cent, respectively, impacted in both
cases by political turbulence.
Box II.3
International tourism revenue vis-à-vis other main export commodities, 1990-2010
Billions of dollars
0
500
1,000
1,500
2,000
2,500
3,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
International tourism
Fuels
Chemicals
Food
Automotive products
Sources: World Tourism
Organization (UNWTO) and
World Trade Organization
(WTO).
Note: International tourism
accounts for 30 per cent
of service exports and
6 per cent of goods and
services exports.
60 World Economic Situation and Prospects 2012
Growing trade in transport services
Trade in services in developing countries is concentrated mostly in transport, travel and
other merchandise trade-related services. Tis is the case on both the import and export
sides. Transport services play a key role in the process of economic development as they
allow for the integration of local goods production into global supply chains and for bring-
ing domestically produced goods directly to international markets. In recent decades,
developing countries have substantially expanded their expertise in the feld of transporta-
tion, especially maritime transport. After initially becoming major market players in the
provision of seafarer and vessel registration, they more recently extended their dominant
position to practically all major maritime sectors. Today, developing economies have more
than a 50 per cent market share in 6 of the 11 sectors covered in table II.2. In shipbuilding,
scrapping and provision of seafarer and vessel registration, developing countries account
for more than three quarters of the supply. In 3 of the 11 sectors, developed countries
continue to dominate, with about 90 per cent or more of the market, notably in protection
and indemnity (P&I) insurance services, ship fnancing and ship classifcation.
Te existing elevated degree of market concentration in the maritime services
business and lack of adequate institutional capacity are seen to form major barriers to entry
for many players. Te increased specialization of maritime services providers in a limited
number of countries increases the distance between them. As a result, diferent industries
in the maritime services business develop ever more independently from each other, but
linkages strengthened by external economies of scale remain between them. For example,
a ship owner might fnd it more convenient to have both insurance and fnancing services
Economies of scale form
barriers to entry in the
maritime services business
Growth in Asia reached 6 per cent, but was unevenly distributed across subregions.
While South-East Asia and South Asia registered double-digit rates, North-East Asia and Oceania
grew more weakly. South America, benefting from favourable economic momentum and increased
regional integration, experienced growth of 13 per cent. In sub-Saharan Africa, arrivals grew by
4 per cent.
On the demand side, expenditures on travel abroad (imports) for the frst part of 2011
continued to be buoyant, thanks to the emerging economies of Brazil, China, India and the Russian
Federation, each increasing by over 20 per cent. Major mature markets—such as Canada, Germany,
Italy and the United States—showed healthy growth rates in the range of 4-6 per cent, while Australia,
the Republic of Korea and the Scandinavian markets had even stronger growth.
According to the latest survey of the World Tourism Organization (UNWTO) Panel of
Experts, while confdence has been deteriorating, it remains positive. Tourism demand is expected to
soften for the remainder of 2011, with full-year arrivals growing between 4 and 4.5 per cent. In 2012,
growth is projected to be in the range of 3 to 4 per cent.
Tourism and employment
Tourism is a signifcant sector for both developed and emerging economies, driving growth by ofer-
ing opportunities for development and diversifcation through the creation of jobs, enterprises and
infrastructure. The direct contribution to gross domestic product (GDP) in major economies of both
inbound and domestic tourism varies between 1.5 and 7.7 per cent.
a
If additional non-direct efects
were included, the contribution of the sector may be anticipated to reach 11 per cent. The direct
contribution to employment lies between 2 and 14 per cent of the growth of total employment.
A recent UNWTO study fnds that employment in tourism was less impacted by and
recovered more rapidly from the crisis compared to other economic sectors.
b
Employment decline
in hotels and restaurants was limited to developed economies in Europe and the Americas, while in
emerging economies, relevant employment growth was actually positive during the crisis.
Box II.3 (cont’d)
a World Tourism
Organization (UNWTO),
“Positioning tourism in
economic policy: evidence
and some proposals”,
available from http://
statistics.unwto.org/sites/all/
fles/docpdf/t20_0.pdf.
b UNWTO, “Economic
crisis, tourism decline and
its impact on the poor”
(forthcoming). A preliminary
version of the study is
available fromhttp://www.
unglobalpulse.org/projects/
rivaf-research-economic-
crisis-tourism-decline-and-
its-impact-poor.
61 International trade
in the same country. Similarly, for ship classifcation, businesses may prefer to be closer
to their clients in the shipbuilding and ship operation businesses, or to banks that fnance
ships requiring certifcation. Furthermore, institutional capacity and demand matter as
well. Having a well-functioning legal framework as well as adequate technical standards
and infrastructure in place is necessary for the expansion of an industrial base that will
allow advantage to be taken of internal economies of scale arising in sectors of maritime
services, such as the operation of container ships or shipbuilding.
In addition to those factors, the participation of developing countries in global
maritime and related businesses has been guided by diferent strategies. Some have relied
on the cost advantage of low wages, others have ofered fscal incentives or have chosen to
support the development of national maritime services through promotional policies and
Table II.1
Rankings of top developing countries and economies in transition in trade in services, 2006-2010
Annual percentage change
Share 2006 2010
2006 2007 2008 2009 2010
World
Rank
Rank among
developing
countries
World
Rank
Rank among
developing
countries
Shares
a
and rankings of top 10 exporters
China 3.2 3.5 3.8 3.7 4.2 8 1 4 1
India 2.4 2.5 2.7 2.6 3.1 12 3 8 2
Singapore 2.3 2.4 2.6 2.6 2.9 13 4 9 3
Hong Kong SAR
b
2.5 2.4 2.4 2.5 2.9 10 2 10 4
Korea, Republic of 1.7 1.8 2.3 2.1 2.2 19 5 15 5
Russian Federation 1.1 1.1 1.3 1.2 1.2 25 6 23 6
Taiwan Province of China 1.0 1.0 0.9 0.9 1.1 26 7 24 7
Thailand 0.9 0.9 0.9 0.9 0.9 28 9 27 8
Turkey 0.9 0.8 0.9 1.0 0.9 27 8 28 9
Brazil 0.7 0.7 0.8 0.8 0.9 31 11 29 10
Developing economies 25.1 25.5 26.4 27 29.6
Economies in transition 2.4 2.6 2.9 2.7 2.7
Shares
a
and rankings of top 10 importers
China 3.7 4.0 4.3 4.8 5.1 6 1 3 1
India 2.1 2.2 2.4 2.5 3.1 14 4 8 2
Singapore 2.4 2.3 2.4 2.5 2.8 13 3 10 3
Korea, Republic of 2.5 2.6 2.6 2.4 2.6 12 2 11 4
Saudi Arabia 1.8 1.9 2.0 2.3 2.1 16 5 16 5
Russian Federation 1.6 1.8 2.0 1.9 2.0 18 6 17 6
Brazil 1.1 1.1 1.3 1.4 1.8 27 10 18 7
Hong Kong SAR
b
1.3 1.3 1.3 1.3 1.4 20 7 20
Thailand 1.2 1.2 1.3 1.2 1.3 23 9 23 9
United Arab Emirates 0.9 1.0 1.2 1.1 1.1 29 11 25 10
Developing economies 29.9 30.7 32.1 33.1 35.7
Economies in transition 3.0 3.3 3.6 3.3 3.4
Source: UNCTADStat.
a
Shares in world total.
b
Special Administrative Region of China.
62 World Economic Situation and Prospects 2012
targeted support. Developing countries such as the Republic of Korea and Singapore have
shown that growth of maritime businesses can work as a catalyst for economic progress.
11
Trade policy developments
The Doha Round
Te ongoing multilateral trade negotiations under the Doha Round (or “Doha Development
Agenda”) of the World Trade Organization (WTO)), which was launched more than ten
years ago, in November 2001, are at a complete stalemate, with practically no prospects
of completion owing to the “all or nothing” approach of the WTO, although there has
been considerable progress on specifc issues. Te most feasible way to conclude the Round
would seem to be by agreeing to a “smaller package” based on what has been agreed upon
thus far, with signifcant additional concessions to provide the LDCs with an “early har-
vest”. Otherwise, the likelihood of any further progress on multilateral trade negotiations
may well be undermined.
In this context, some participating Governments have raised the notion of a
“variable geometry” approach in WTO negotiations with a view to undertaking deeper
commitments and obligations amongst themselves. Tis approach is clearly a step removed
from the fundamental concept of the WTO as a “single undertaking”, which is the basis
for all existing WTO multilateral trade agreements—but not for those of the General
Agreement on Tarifs and Trade (GATT) before it. If implemented, it may put at risk the
unconditional most favoured nation (MFN) treatment, which has been the cornerstone
of the multilateral trading system since the inception of GATT at the end of the 1940s.
Te current irreconcilable deadlock in the Doha Round has provided ad-
ditional motivation for countries to engage in preferential bilateral and regional trade
11 See UNCTAD, Review of Maritime Transport 2011 (United Nations publication, forthcoming).
The Doha Round remains
in a stalemate
The stalemate has
increased the role
of RTAs
Table II.2
Maritime sectors, comparison
Maritime transport sectors
Share of top 10
countries in
world total
Share of developing
countries in top
10 countries
Number of developing
countries among
top 10 countries
Ship scrapping (dwt) 99 99 5
Ship registration (dwt) 72 53 6
Ratings (headcounts) 50 90 8
Ofcers (headcounts) 52 75 6
Shipbuilding (dwt) 98 76 6
Classifcation (dwt) 69 26 4
Container terminal operations (TEU) 62 67 5
Container ship operation (TEU) 73 42 5
Ship owning (dwt) 95 11 2
Insurance, protection and indemnity (dwt) 75 2 2
Ship fnancing (US dollars) 70 0 0
Source: UNCTAD, Review of Maritime Transport 2011 (United Nations publication, forthcoming).
Note: “TEU” and ”dwt” are cargo capacity measurement units meaning “twenty-foot equivalent unit” and
“deadweight tonnage”.
63 International trade
agreements (RTAs). Te incentive for RTAs, in comparison to the WTO multilateral trade
agreements, is the possibility of undertaking deeper trade policy integration by including
and implementing WTO-plus and/or WTO-extra provisions such as those for non-tarif
measures, services sectors, intellectual property rights, or trade policy-related labour and
environment issues. RTAs also require much less time to negotiate—a crucial factor for
businesses. But this does not necessarily mean that RTAs also serve the objectives of long-
term development strategies of developing countries or that they would be in the interest of
workers in developed countries. Contradictions may arise when relatively small countries
fnd themselves either negotiating with powerful global businesses or with powerful coun-
try counterparts. Likewise, without the safeguards of multilateral and globally inclusive
understandings regarding the protection of employment, workers remain vulnerable to the
growing political power of corporations operating as global supply chains.
For example, global supply chains led by business interests play a major cata-
lytic role for new RTAs, as an increasing number of frms are now ofshoring production
networks to developing and other economies. Tis will require new predictable trade and
investment rules. According to WTO estimates, there are now about 300 RTAs in force
worldwide compared with 37 in 1994, half of which have come into efect since 2000.
Many countries, including developing economies, see RTAs as a way to shield themselves
against external shocks, lock in market access with their key market counterparts, particu-
larly those in the North, and circumvent the lengthy multilateral process of negotiations
under the WTO. In the case of South-South trade, it is easier to improve market access
through RTAs, consistent with each country’s development objectives. Many developing
countries perceive this to be the most feasible means for gaining market access as the
prospects for completing the multilateral trade negotiations seem more remote.
The continued threat of protectionism
Since early 2008, a number of countries have introduced protectionist measures restricting
trade as part of their response to the global crisis. Tese attempts at protecting domestic
industries have raised fears of spiralling retaliatory responses, but resurgent protectionism
has been restrained thus far. Te most recent joint WTO-OECD-UNCTAD report of
25 October 2011 showed that new import restriction measures taken between May and
mid-October of 2011 afect only 0.6 per cent of total G20 imports, the same proportion
recorded during the prior six months. Restrictive measures mainly afected machinery and
mechanical appliances, iron and steel articles, electrical machinery and equipment, organic
chemicals, plastics and man-made staple fbres. Te incidence is less than that recorded
from October 2008 to October 2009 when trade-restrictive measures peaked, afecting
1.01 per cent of total world imports. However, the report noted that the political will to
resist creeping protectionism appears to be under increasing pressure. Commitments made
by G20 members to roll back export restrictions have not been met. In fact, the number of
export restrictions has continued to increase.
12
12 While the number of export restrictions has increased signi?cantly, from 16 over the period
from September 2009 to mid-October 2010 to 30 from mid-October 2010 to mid-October 2011,
the amount of world trade covered by all restrictions has fallen from 0.8 per cent of total world
imports in the ?rst report of September 2009 to 0.5 per cent in the most recent report. See Reports
on G20 Trade and Investment Measures, issued on 14 September 2009 and 25 October 2011 by
the World Trade Organization (WTO), Organization for Economic Cooperation and Development
(OECD) and UNCTAD.
Protectionist measures in
response to the crisis have
been of low intensity so far
64 World Economic Situation and Prospects 2012
Te institutional function of the WTO to administer multilateral trade rules
and disciplines is pivotal in ensuring that members do not resort to full-blown “beggar-
thy-neighbour” policies. Yet, given the present international economic environment, there
is still a danger that more countries will enhance protectionist measures, especially non-
tarif measures (NTMs), should political emotions dull the memories of the damaging
efects of past “beggar-thy-neighbour” policies and overpower the commitments to and
rationale for a multilateral trading system. Te danger may increase if unemployment rates
remain high and the recovery loses further momentum.
In this context, there is an urgent need to address NTMs. Tere are legitimate
reasons for NTMs, such as the protection of health, safety and the environment, but they
have also been abused as a pretext for protectionism. NTMs therefore pose a major trade
policy challenge. Since 2008, the leaders of G20 countries have repeatedly discussed re-
fraining from NTM use because of their potential for slowing down the positive outcomes
of trade expansion and integration.
13
“Green protectionism” through NTMs has recently
increased. While there are legitimate grounds for environmental protection in support of
sustainable production and consumption, concerns have arisen that such incentives are
forms of trade distortion that cannot be properly challenged in the dispute settlement
mechanism under current WTO trade rules. Hence, multilateral trade rules need further
revision to ensure that the necessary Government support to promote environmental pro-
tection and sustainable production and consumption is provided without undermining
the principles of a fair trading system.
13 See the G20 Cannes Summit Final Declaration of 4 November 2011, para. 65: “At this critical time
for the global economy, it is important to underscore the merits of the multilateral trading system
as a way to avoid protectionism and not turn inward. We rea?rm our standstill commitments until
the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may
have risen, including new export restrictions and WTO-inconsistent measures to stimulate exports
and ask the WTO, OECD and UNCTAD to continue monitoring the situation and to report publicly
on a semi-annual basis.” Available fromhttp://www.g20.org/index.aspx.
NTMs are posing a serious
policy challenge
65 International trade
Appendix
Trade shocks and changes in merchandise trade balance, by region, 2001-2013
Percentage of gross domestic product of the region
Demand shock:
change of export
volume
Terms-of-trade
shock: net value
change
Total
trade shock
Change in
import volume
Net change in
trade balance
World
Average 2001-2007 1.3 0.0 1.3 1.3 0.0
2008 0.9 0.0 0.8 0.8 0.0
2009 -3.4 0.0 -3.3 -3.3 0.0
2010 3.2 0.0 3.2 3.2 0.0
2011
a
1.7 0.1 1.8 1.8 0.0
2012
b
1.0 0.0 1.1 1.1 0.0
2013
b
1.3 0.0 1.4 1.4 0.0
Developed economies
Average 2001-2007 0.8 -0.2 0.5 0.8 -0.3
2008 0.4 -0.7 -0.3 -0.2 -0.1
2009 -3.4 0.7 -2.7 -3.5 0.8
2010 2.4 -0.3 2.1 2.2 -0.1
2011
a
1.2 -0.5 0.7 0.7 0.0
2012
b
0.6 0.1 0.8 0.6 0.1
2013
b
0.9 0.0 1.0 0.8 0.2
Economies in transition
Average 2001-2007 3.6 2.2 5.7 2.9 2.8
2008 1.7 4.7 6.4 1.8 4.5
2009 -4.1 -6.1 -10.1 -5.8 -4.4
2010 3.1 3.0 6.0 2.7 3.4
2011
a
2.3 4.0 6.2 2.3 3.9
2012
b
0.8 -0.8 -0.1 1.4 -1.5
2013
b
1.3 -0.4 1.0 1.5 -0.5
Developing economies
Average 2001-2007 3.1 0.5 3.6 2.7 0.8
2008 2.1 1.1 3.2 1.7 1.5
2009 -3.1 -0.9 -4.0 -2.7 -1.3
2010 4.8 0.6 5.4 4.8 0.6
2011
a
2.7 0.8 3.5 2.0 1.5
2012
b
1.8 -0.1 1.7 2.1 -0.3
2013
b
2.0 0.0 2.1 2.2 -0.1
Least developed countries
Average 2001-2007 3.1 0.5 3.6 2.7 0.8
2008 2.1 1.1 3.2 1.7 1.5
2009 -3.1 -0.9 -4.0 -2.7 -1.3
2010 4.8 0.6 5.4 4.8 0.6
2011
a
2.7 0.8 3.5 2.0 1.5
2012
b
1.8 -0.1 1.7 2.1 -0.3
2013
b
2.0 0.0 2.1 2.2 -0.1
66 World Economic Situation and Prospects 2012
Appendix (cont’d)
Demand shock:
change of export
volume
Terms-of-trade
shock: net value
change
Total
trade shock
Change in
import volume
Net change in
trade balance
East and South Asia
Average 2001-2007 4.9 -0.2 4.7 3.5 1.2
2008 2.6 -0.5 2.1 1.8 0.4
2009 -3.2 1.3 -1.9 -2.2 0.3
2010 7.1 -0.7 6.4 5.9 0.5
2011
a
3.8 -0.2 3.7 2.5 1.1
2012
b
2.5 0.4 2.9 2.3 0.5
2013
b
2.6 0.4 3.0 2.5 0.4
Western Asia
Average 2001-2007 1.2 2.5 3.7 3.1 0.5
2008 4.0 7.3 11.3 2.0 9.3
2009 -5.5 -8.6 -14.1 -3.4 -10.6
2010 1.6 4.1 5.7 2.5 3.2
2011
a
1.3 4.9 6.3 0.4 5.9
2012
b
1.2 -1.2 0.0 2.2 -2.2
2013
b
1.8 -0.4 1.4 1.4 -0.1
Africa
Average 2001-2007 0.7 1.2 1.9 2.7 -0.8
2008 2.5 2.9 5.4 2.1 3.3
2009 -3.6 -3.1 -6.8 -2.8 -3.9
2010 0.9 1.9 2.8 2.1 0.7
2011
a
0.9 1.9 2.8 0.4 2.4
2012
b
0.8 -0.6 0.1 2.1 -2.0
2013
b
1.2 -0.4 0.8 1.3 -0.5
Latin America and the Caribbean
Average 2001-2007 1.0 0.7 1.7 1.0 0.7
2008 -0.1 1.0 0.9 1.4 -0.5
2009 -1.5 -0.8 -2.3 -3.3 1.0
2010 2.1 1.5 3.6 4.0 -0.4
2011
a
1.0 0.9 1.9 1.9 -0.1
2012
b
0.8 -0.6 0.3 1.3 -1.0
2013
b
1.0 -0.5 0.5 1.8 -1.3
Source: UN/DESA World Economic Vulnerability Monitor, based on UN Comtrade and UNCTAD data.
a
Figures for 2011 are partly estimated.
b
Figures for 2012-2013 are projections.
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