I RECENT TRADE DEVELOPMENTS AND SELECTED TRENDS

IN TRADE

RECENT TRENDS IN INTERNATIONAL TRADE

A RECENT TRENDS IN INTERNATIONAL TRADE

AND SELECTED TRENDS IN TRADE

RECENT TRADE DEVELOPMENTS
1. INTRODUCTION: THE STATE OF THE WORLD ECONOMY AND TRADE
IN 2006

The year 2006 witnessed robust growth in the world economy and vigorous trade expansion. According
to data available in April 2007, which has been used in this section, global gross domestic production
(GDP) growth accelerated to 3.7 per cent, the second best performance since 2000. All major regions
recorded GDP growth in excess of population growth.

Economic growth in the least-developed countries continued to exceed 6 per cent for the third year

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in a row. A large part of the stronger global economy is attributable to the recovery in Europe, which
turned out to be stronger than expected in early 2006. The United States economy maintained its overall

WORLD TRADE REPORT 2007

expansion as weaker domestic demand was balanced by a reduction in the external deficit, mainly due
to a faster export growth. In Japan somewhat faster economic growth was achieved despite weaker
domestic demand reflected in a widening of its external surplus. China and India continued to report
outstandingly high economic and trade growth.

Strong economic fundamentals in many key economies contributed to stronger investor confidence
worldwide. General government deficits decreased in the United States, the European Union and in
Japan and inflationary pressures were contained. A high level of global monetary liquidity combined
with a low level of real interest rates contributed to a rally on global stock markets. Stock markets in
emerging economies again recorded much faster growth than those in developed economies. Increased
investor confidence in emerging markets is also reflected in the sharply reduced spread in interest margins
between emerging market bonds and those of US government bonds.

The more favourable investment climate is also reflected in a sharp rise in global foreign direct investment
(FDI) flows in 2006, which approached the record levels of the past. UNCTAD1 reports that global FDI
inflows surged by one-third to $1.23 trillion, the second highest level ever. The high growth of global
FDI flows can be attributed partly to increased mergers and acquisitions activity and higher share prices.
A high level of total net private capital flows to emerging markets was reported by the Institute of
International Finance.2

A further sign of high global liquidity is the rise in global foreign exchange reserves and the advanced
re-payment of external public debt by a number of developing countries. Debt levels, measured by the
outstanding debt to GDP ratios, decreased in all developing regions partly due to debt forgiveness. For
the heavily indebted poor countries the debt levels in 2006 are estimated to have come down to half the
level reported five years ago.3

The real effective exchange rate of the US dollar continued to depreciate moderately, contributing to the
readjustment of the US current account deficit (the trade deficit in goods and services).4 The exchange
rates of the Asian economies with large current account surpluses fared differently in 2006. On an annual
average basis, real effective exchange rates appreciated significantly in the case of the Republic of Korea
and Singapore and moderately in the case of China. The Japanese yen, however, continued to depreciate
in 2006.5

1
UNCTAD, UNCTAD Investment Brief, No.1, 2007.
2
Institute for International Finance, Capital Flows to Emerging Market Economies, January 18, 2007.
3
IMF, World Economic Outlook, April 2007, Table 40.
4
The ratio of the US current account deficit to US GDP is estimated to have remained unchanged in 2006 and the
deficit started to decline in current dollar terms in the fourth quarter of 2006.
5
JPMorgan, Real broad effective exchange rate indices. Direct communication to the WTO Secretariat, March 2007.

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RECENT TRENDS IN INTERNATIONAL TRADE

High global liquidity and a further steep rise in the price of fuels and nominal interest rates have not
so far translated into higher domestic inflation rates. In developed markets consumer price increases
AND SELECTED TRENDS IN TRADE
RECENT TRADE DEVELOPMENTS

averaged between 2 and 3 per cent, and in the developing economies the rate was about 5 per cent.
In both developed and developing regions no acceleration in consumer price inflation was observed
between 2005 and 2006.6 However, inflationary pressures can be detected in sectors for which supply is
less elastic, such as real estate markets and auction prices for works of art.

The strong global macroeconomic situation in 2006 provided a favourable framework for the expansion
of international trade. In 2006, world merchandise exports grew in real terms (i.e. at constant prices) by
8.0 per cent, compared to 6.5 per cent in the preceding year. A large part of this trade acceleration can be
attributed to the marked recovery in Europe’s export and import growth. Higher prices of fuels and metals
led to a moderate increase in the quantity of mining products traded internationally but the higher export
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earnings of oil exporters resulted in import growth in excess of the world average. High energy prices also
WORLD TRADE REPORT 2007

invigorated demand for mining equipment and investment in machinery with high energy efficiency.

China’s merchandise trade expansion remained outstandingly strong in 2006. Office and telecom equipment
continued to be the mainstay of Chinese export growth but significant gains in world market shares in
2006 could be observed in “traditional” exports such as clothing and “new” products such as iron and
steel. Chinese imports again rose faster than global trade but continued to lag behind export growth.

2. REAL MERCHANDISE TRADE DEVELOPMENTS AND OUTPUT IN 2006

The pick up in global economic activity was the major factor in the vigorous expansion of global trade
in 2006. Real merchandise export growth is provisionally estimated to have grown by 8.0 per cent in
2006, almost two percentage points faster than in 2005, and well above the average expansion of the
last decade (1996-2006). The expansion of real trade exceeded global output growth by more than
4 percentage points (see Chart 1).

Chart 1
Growth in the volume of world merchandise trade and GDP, 1996-2006
(Annual percentage change)

12

GDP

10 Merchandise exports

8
Average export
growth 1996-06
6

Average GDP growth

4

1996 97 98 99 00 01 02 03 04 05 2006
-2

Source: WTO.

6
IMF, World Economic Outlook, April 2007.

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 RECENT TRENDS IN INTERNATIONAL TRADE
In 2006, the variation in regional real trade growth increased even though economic growth by region

AND SELECTED TRENDS IN TRADE

differed less than in the preceding year. These divergent developments can be attributed largely to the

RECENT TRADE DEVELOPMENTS

terms of trade changes in favour of fuel-exporting countries and regions. The North American region
comprises two net exporters of fuels and the United States, which is a major net importer of fuels. The
real merchandise exports of the United States rose by 10.5 per cent in 2006, which was the highest
growth rate since 1997 and almost two times faster than its import growth. Energy related petroleum
products decreased by 2.5 per cent in volume terms. Weaker domestic demand in the United States,
a lower real effective (i.e. trade weighted) dollar exchange rate, and stronger global demand growth
contributed to this favourable development. Canada’s merchandise exports slowed down markedly due
to the combination of lower US demand and a marked appreciation of the Canadian dollar since 2002.
Mexican merchandise trade expanded vigorously with both imports and exports up by double digit rates

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as its economy recorded its best growth since 2000.

WORLD TRADE REPORT 2007

At 13.5 per cent, Asia’s real merchandise exports remained the most buoyant of all regions. Asia’s imports
rose faster than in the preceding year and faster than world trade but continued to lag behind its export
growth. Most of the excess of Asia’s export over import growth can be attributed to the region’s major
traders, China and Japan. The expansion of China’s exports was somewhat less dynamic in 2006 than
in 2005, while Japan, the Republic of Korea and Chinese Taipei recorded a faster growth (between
10 and 15 per cent). Imports into Japan and Chinese Taipei, however, advanced by only 2 to 3 per cent
in 2006.

Table 1
GDP and merchandise trade by region, 2004-06
(Annual percentage change, at constant prices)

GDP Exports Imports

2004 2005 2006 2004 2005 2006 2004 2005 2006

North America 3.9 3.2 3.4 8.0 6.0 8.5 10.5 6.5 6.5
United States 3.9 3.2 3.4 8.5 8.0 10.5 11.0 6.0 5.5

South and Central America a 6.9 5.2 5.2 13.0 8.0 2.0 18.5 14.0 10.5

Europe 2.4 1.8 2.8 7.0 4.0 7.5 7.0 4.0 7.0
European Union (25) 2.3 1.6 2.8 7.0 4.0 7.5 6.5 3.5 6.5

Commonwealth of Independent States (CIS) 8.0 6.7 7.5 12.0 3.5 3.0 16.0 18.0 20.0

Africa and Middle East 6.0 5.5 5.4 8.0 5.0 1.0 14.0 13.0 8.5

Asia 4.8 4.1 4.4 15.5 11.5 13.5 14.5 8.0 8.5
China 10.1 9.9 10.7 24.0 25.0 22.0 21.5 11.5 16.5
Japan b 2.7 1.9 2.2 13.5 5.0 10.0 6.5 2.0 2.0
India 8.0 8.5 8.3 15.5 20.5 11.5 16.0 20.5 12.0

World 3.9 3.2 3.7 10.0 6.5 8.0 ... ... ...

a
Includes the Caribbean.
b
Trade volume data are derived from customs values deflated by standard unit values and an adjusted price index for electronic
goods.
Source: WTO.

Europe’s real merchandise exports recorded their strongest annual growth since 2000, exceeding import
growth (estimated at 7 per cent) but continued to lag behind the global rate of trade expansion. European
countries recorded considerable variation in their trade performance. Double-digit export growth can be
observed for the countries at its eastern border, ranging from Finland and the Baltic states in the North to
Turkey in the South. All these countries benefited from further integration with the EU and the strength
of import demand from the Commonwealth of Independent States (CIS) region. Both Germany and the
United Kingdom recorded export and import growth well above the European average, while real trade
growth was sluggish in Italy and Spain and stagnated in France and Ireland.

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RECENT TRENDS IN INTERNATIONAL TRADE

The four net fuel exporting regions (CIS, Middle East, Africa and South/Central America and the
Caribbean) only recorded a small increase in their export volume (of about 2 percentage points), while
AND SELECTED TRENDS IN TRADE
RECENT TRADE DEVELOPMENTS

their imports rose faster than global trade in 2006 (Chart 2). The most buoyant imports of all regions
were observed for the Commonwealth of Independent States, which are estimated to have expanded by
20 per cent, while the region’s real exports remained sluggish in 2006. In contrast to these global trade
developments, South and Central America’s expansion rate of both exports and imports decelerated
in 2006. Venezuela recorded a marked contraction of her exports and those of Brazil rose by less than
4 per cent. The combined exports of Africa and the Middle East are estimated to have almost stagnated,
while imports, despite their deceleration, continued to expand somewhat faster than the global average.
While the slowdown in the exports of these regions can be linked to reduced demand for the more
expensive categories of fuels and metals, the increase in imports might be considered modest given the
outstanding income growth of these regions over the last three years.7
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WORLD TRADE REPORT 2007

Chart 2
Real merchandise trade growth by region, 2006
(Annual percentage change)

Commonwealth of
Independent States

South and Central

America a

Africa and Middle East

Asia

Imports
Europe World
exports
Exports

North America

0 2 4 6 8 10 12 14 16 18 20 22

a
Includes the Caribbean.
Source: WTO.

7
There are indications that some imports are not fully covered in the regular trade returns which could lead not only
to an underreporting of the level of imports but also to an underestimation of their import growth.

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 RECENT TRENDS IN INTERNATIONAL TRADE
3. NOMINAL MERCHANDISE AND COMMERCIAL SERVICES TRADE

AND SELECTED TRENDS IN TRADE

DEVELOPMENTS IN 2006 8

RECENT TRADE DEVELOPMENTS

World merchandise exports in dollar value terms were strongly affected by price developments in 2006.
Price developments differed widely by sector in the course of the year. According to the IMF commodity
price indices, the world export prices of minerals and non-ferrous metals increased by 56 per cent, those
of fuels by 20 per cent and those of food and agricultural raw materials by 10 per cent (see Chart 3).
Export prices of manufactured goods are estimated to have increased by not more than 3 per cent.9

Chart 3
Export prices of selected primary products, 2005 and 2006

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(Annual percentage change)

WORLD TRADE REPORT 2007

Minerals and
non-ferrous metals

Fuels

Agricultural
raw materials

Food

2006

2005
Beverages a

-5 5 15 25 35 45 55 65

a
Comprising coffee, cocoa beans and tea.
Source: IMF, International Financial Statistics.

Price changes for manufactured goods remained less strong than those for primary products for the
third consecutive year. An important element in the moderate price trends for manufactured goods was
the continued decline in prices for electronic goods, which accounted for more than one in six dollars of
world exports of manufactured goods in 2005. These shifts in relative prices explain largely the different
regional export unit values (prices) which ranged from 4 per cent to 5 per cent for Asia and Europe to
about 18 per cent to 20 per cent for exports of South and Central America, Africa, the Middle East and
the CIS. Information on price trends for world commercial services trade are not available. However,
the price deflators for US services exports and imports increased between 3 and 4 per cent in 2006,
somewhat less rapidly than in the preceding year.

Overall exchange rate developments in 2006 only had a moderate impact on the dollar price level of
internationally traded goods. Contrary to developments between 2002 and 2004, the average annual
exchange rate change between the US dollar and the euro and the British pound had been rather
moderate as divergent developments in the course of 2005 and 2006 balanced each other. While a
weaker yen might have contributed to weaker dollar export prices of Japan, the appreciation of the
Canadian dollar and the currencies of several Asian traders had the opposite effect (see Chart 4).

8
Merchandise trade values for 2006 were estimated on the basis of monthly customs data while commercial services
data are derived from Balance of Payments statistics. The latter are typically available later than merchandise trade
data, contributing to a greater uncertainty in the estimates for services than for merchandise trade in 2006.
9
Dollar export prices of manufactured goods increased in the United States and Germany by 2.5 per cent and
1.7 per cent respectively while those of Japan decreased by 2.5 per cent in 2006. China’s export unit value index for
manufactured goods rose by 3.6 per cent in 2006.

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RECENT TRENDS IN INTERNATIONAL TRADE

Chart 4
Dollar changes vis-à-vis selected major currencies, 2001-06
AND SELECTED TRENDS IN TRADE
RECENT TRADE DEVELOPMENTS

(Indices, January 2001=100)

120 120

110 110
Euro(€)
CAN$

100 UK£ 100

90 90
Japanese yen
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NICs a
WORLD TRADE REPORT 2007

80 80 Chinese yuan

70 70
2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006

a
Trade weighted currency basket of the Korean won, the Singapore dollar and Chinese Taipei dollar.
Source: IMF, International Financial Statistics.

World merchandise exports in dollar terms rose by 15.4 per cent to $11.76 trillion. About 40 per cent of
this value change can be attributed to inflation. Commercial services exports rose by 11 per cent to $2.71
trillion. The increase in commercial services exports in 2006 was about the same as in the preceding year
and for the fourth consecutive year less pronounced than that of merchandise trade. It is uncertain to
what extent divergent relative price developments have contributed to the differences in the growth of
merchandise and commercial services trade values.

Table 2 Merchandise exports by region in dollar

World exports of merchandise and commercial services, 2006 terms have been strongly affected again
(Billion dollars and percentage)
by price developments. The four regions
Value Annual percentage change with the highest share of fuels and other
2006 2000-06 2004 2005 2006 mining products in their merchandise
Merchandise 11762 11 22 14 15 exports – the Middle East (70 per cent
in 2005), Africa (65 per cent), the
Commercial services 2710 10 10 11 11
Commonwealth of I nd e p end ent
Source: WTO. States (60 per cent) and South/Central
America (37 per cent) again recorded
the strongest annual export increases in 2006. However, as prices of fuels increased in 2006 less rapidly
than in 2005, the sharp rise in the export values of these regions were in effect smaller than in the
preceding year. The opposite development can be observed for the net importers of fuels – North
America, Europe and Asia reported a faster export growth in 2006 than in 2005, although the growth
in their shipments remained less strong than that of the fuel exporting regions.

Although Europe’s merchandise exports recorded the weakest regional growth rate (13 per cent), its share
in world merchandise exports, at 42 per cent, remained the largest of all regions. Europe’s imports rose by
14 per cent to $5.22 trillion. Intra-EU (25) trade rose by 13 per cent, which was somewhat stronger than
export growth to third countries (11 per cent) but slower than imports from third countries (15 per cent).
The Baltics and the Balkan states continued to record export and import growth in excess of 20 per cent.
The combined exports/imports of the Balkan states exceed those of Turkey, whose exports and imports
also expanded faster than those of total Europe.

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 RECENT TRENDS IN INTERNATIONAL TRADE
In North America, Mexico reported stronger export and import growth than its NAFTA partners. The

AND SELECTED TRENDS IN TRADE

United States reported its best annual export growth performance (14 per cent) in more than a decade,

RECENT TRADE DEVELOPMENTS

and although US export growth exceeded its import growth (11 per cent), the merchandise trade deficit
had grown already so large that it continued to grow in 2006. Only in the fourth quarter, supported by
the decline in import volumes and falling import prices for crude oil, did the US merchandise trade deficit
started to decrease.

Asia’s merchandise exports and imports continued to expand faster than world trade in 2006. Among
the six major Asian traders China continued to record the highest export and import growth, and as its
export growth continued to exceed its import growth, the merchandise trade surplus rose sharply. In the
course of 2006, China’s trade surplus widened further as the momentum in the export expansion was

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maintained while nominal import growth slackened, partly due to weaker oil prices. The dollar value of

I
Japan’s merchandise exports grew by nearly 9 per cent but continued to lag behind the expansion of

WORLD TRADE REPORT 2007

world trade and its own import growth. The fast growing economies of India and Viet Nam reported
a vigorous expansion of exports and imports, in the range of 20 per cent to 35 per cent in 2006. Since
1995, the exports and imports of these two countries have expanded faster than Asia’s trade and their
share in world merchandise exports increased markedly. Among the smaller Asian traders, Bangladesh,
Cambodia and Mongolia continued their double-digit export expansion, a feature since 2003, with
exports up between 20 per cent and 44 per cent in 2006. The merchandise trade of New Zealand virtually
stagnated while that of Chinese Taipei and the Philippines was less dynamic than world trade in 2006.

Africa’s merchandise exports rose by 21 per cent, again faster than imports, which are estimated to have
increased by nearly 16 per cent. The share of Africa in world merchandise exports reached its highest
level since 1990. Although most of Africa’s export growth can be attributed to the rise in oil exports,
it is a noticeable development that non-oil exporting African countries increased their exports by about
16 per cent. It is estimated that about one in 10 African countries experienced a decline in their exports,
while half of them recorded an export expansion which exceeded the global average. South Africa, the
region’s largest merchandise trader, reported a rise in its imports of 24 per cent while exports advanced
by 13 per cent.

Middle Eastern trade has been strongly affected by political and oil market developments. The region’s
merchandise exports are estimated to have grown by 19 per cent, roughly in line with crude oil prices.
Merchandise imports increased by 14 per cent which must be considered a rather moderate increase
given the surge in the region’s export earnings and foreign exchange reserves in the past years.

Among the seven geographic regions distinguished in this report, the Commonwealth of Independent
States (CIS) recorded the most dynamic export and import growth in 2006. Benefiting from strong fuel
and metal prices on world markets, the region’s exports increased by one-quarter last year to $422 billion,
more than twice the level recorded only three years ago. Imports rose by nearly one-third to $278 billion,
but the region’s merchandise trade surplus continued to expand by about $20 billion in 2006.

South/Central America’s merchandise exports and imports continued to expand faster than world trade
in 2006 even though their growth was less pronounced than in the preceding year. The deceleration in
the region’s export growth is attributable largely to the performance of the region’s oil exporters and
Brazil. Sharply higher prices for metals benefited exports from Chile, Jamaica, Peru and Suriname. The
exports of Chile and Peru surged by more than 40 per cent, the highest export growth rates reported in
the region in 2006.

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RECENT TRENDS IN INTERNATIONAL TRADE
AND SELECTED TRENDS IN TRADE

Box 1: Textiles and clothing trade developments in 2006

RECENT TRADE DEVELOPMENTS

In the second year after the phasing out of the Agreement on Textiles and Clothing, the structural
changes in world trade of textiles and clothing continued unabatedly. Exporters from developed
countries and those from advanced developing economies in East Asia are losing market share,
together with major developing suppliers in Central America and the Mediterranean region, which
process textiles originating from developed countries. China’s exports continued to gain market
share in all major developed import markets despite restrictions introduced in 2005. Some smaller
suppliers expanded their textiles and clothing exports even faster than China and the share of least-
developed countries in imports of the United States and the European Union increased sharply in
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2006.
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WORLD TRADE REPORT 2007

The annual expansion rate of textiles and clothing imports from China into Canada, the United
States and the EU was roughly halved between 2005 and 2006 in each of these three markets.
The combined textiles imports of the three economies from China rose by 41 per cent in 2005
and is estimated to have increased by 15 per cent in 2006. Despite the sharp deceleration this
rate is still about twice the rate of imports from all sources (with EU intra-trade excluded). These
import developments suggest that the introduction of quotas in the United States and the EU in
the course of 2005 had a restrictive effect on textiles imports from China. On the other hand, the
deceleration in textiles exports from China to Canada was about the same as to the United States
in the absence of any new quotas. The new restrictions also had no apparent effect on China’s
overall exports of textiles and clothing to the world, which increased in 2006 by one-quarter
– somewhat faster than in 2005 (21 per cent).

Imports of textiles and clothing of the four major developed markets (incl. Japan) are estimated
to have increased by 5.5 per cent, to about $350 billion in 2006. This increase was slightly faster
than in the preceding year despite the deceleration in US import growth, to less than 4 per cent.
In contrast to the moderate overall import growth, intra-NAFTA textiles (and clothing) trade was
declining and that of intra-EU(25) stagnated in 2006. US imports from CAFTA members and the
Dominican Republic, and Sub-Saharan Africa, declined by 7 per cent and 10 per cent respectively.
The strongest decline in US imports (–14 per cent) was observed for the more advanced economies
in Asia (i.e. Hong Kong, China; Chinese Taipei and the Republic of Korea). US imports from the
EU (25), which still exceeded those from India in 2005, decreased by 2.5 per cent in 2006.

The import decline from these suppliers was balanced by a double digit increase of imports from
six Asian countries. While imports from China increased by 15 per cent and accounted for nearly
30 per cent of total US imports of textiles and clothing, the rise in imports from Indonesia, Viet
Nam, Bangladesh and Cambodia exceeded that from China. Imports from India, a major supplier to
the United States, rose 12 per cent in 2006, which was less than the rate recorded by China.

The re-shuffling of EU import shares had similarities with those of the US market. Some of the
major traditional suppliers (e.g. Turkey, Romania, Morocco, Tunisia) lost market shares while Asian
developing countries increased their share. As in the US market, China expanded its role as leading
supplier, but imports from smaller Asian suppliers tended to rise faster than those from China.
Rather untypical is the sharp rise of EU clothing imports from Hong Kong, China in 2006.

Among the developed markets Japan’s textiles and clothing imports are the most concentrated
on China due both to geographic proximity and the absence of import quotas in the recent past.
More than three-quarters of Japan’s textiles and clothing imports originated from China in 2006.
The share exceeds 80 per cent for clothing imports.

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 RECENT TRENDS IN INTERNATIONAL TRADE
AND SELECTED TRENDS IN TRADE
At nearly 9 per cent, Canada recorded with the strongest rise in textiles and clothing imports of

RECENT TRADE DEVELOPMENTS

the four major developed markets in 2006. Imports from China rose by more than 20 per cent.
The structural shifts among suppliers observed in 2006 were similar to those observed in the US
market.
Imports of textiles and clothing into major markets by origin, 2006
(Billion dollars and percentage change)

United States EU(25) Japan Canada

World (value) 106.4 197.5 30.0 11.2

Annual Growth

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World 4 6 6 9

WORLD TRADE REPORT 2007

China 15 13 8 22
India 8 13 12 6
Pakistan 12 12 -7 9
Bangladesh 22 31 4 19
Cambodia 25 17 ... 21
Indonesia 25 17 4 18
Philippines 9 20 ... 5
Viet Nam 18 48 6 33
Thailand 1 9 -2 0
Sri Lanka 2 21 12 ...
East Asia(4) -14 22 -5 -12

Sub-Saharan Africa -10 9 ... ...

Egypt 32 13 ... ...
Morocco 69 4 ... ...
Tunisia ... 1 29 ...

CAFTA -7 64 ... ...

Mexico -10 13 6 7
Canada -7 6 -7 ...
United States ... 11 -3 -1

EU(25) -3 1 -2 2
Romania 15 1 ... ...
Bulgaria -18 13 ... ...
Turkey -17 4 20 -1

Memorandum items:
Least-developed countries 14 27 27 17
Hong Kong, China ... 44 ... ...

Note: East Asia(4) comprises Chinese Taipei; Hong Kong, China; Macao, China and the Republic of Korea. EU(25) imports include
intra-trade.
Source: Global Trade Atlas and Eurostat, COMEXT data base.

It is clear from the discussion above that trade expansion in 2006 was very favourable for the developing
countries as a group. Their combined merchandise exports rose by 20 per cent, to $4.27 trillion, and
imports rose by 17 per cent. The share of developing countries in world merchandise exports reached,
with 36 per cent, an all-time record level. The share of developing countries in world merchandise imports
was 31 per cent, the largest share in more than a quarter of a century. For the least-developed countries,
the expansion of merchandise exports has been even stronger than for the developing countries over
the last six years, including 2006. Least-developed countries’ exports are estimated to have increased by
about 30 per cent, to $108 billion in 2006. Their share in world merchandise exports reached 0.9 per cent,
the highest level since 1980 (the first year for which records are kept). Merchandise imports rose by
17 per cent, which was far less rapid than merchandise exports, leading the least-developed countries as

9
RECENT TRENDS IN INTERNATIONAL TRADE

a group to record a trade surplus for the first time. Because of differences in commodity composition,
individual country performance, and relative country size, aggregations such as developing countries and
AND SELECTED TRENDS IN TRADE
RECENT TRADE DEVELOPMENTS

least-developed countries are increasingly less meaningful for trade analysis (see Appendix Table 1).

World commercial services exports rose by 11 per cent to $2.7 trillion in 200610. The expansion rate of
global services trade was basically unchanged from the preceding year and that of the last six years. Since
2003, commercial services exports expanded less rapidly each year than merchandise trade.

Among the three broad commercial services categories, transportation, travel and “other commercial
services”, the latter is by far the largest and also the fastest growing category. In 2006, other commercial
services categories expanded by 13 per cent while transportation and travel services were up by
9 per cent and 7 per cent respectively.
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Table 3 In the 1990s, transportation services

WORLD TRADE REPORT 2007

World exports of commercial services trade expanded less rapidly than travel, but
by major category, 2006 since 2000 the situation has been
(Billion dollars and percentage change) reversed. The relatively sluggish growth
Value Annual percentage change of travel services can be observed in
2006 2000-06 2004 2005 2006 all major exporting regions but is most
pronounced in North America’s services
Commercial services 2710 10 20 11 11
trade.
Transport 626 10 25 12 9
Travel 737 7 18 8 7
Commercial services trade by region is
Other commercial
1347 12 19 12 13
presented in Appendix Table 2. Europe
services
and North America, recorded – as in
Source: WTO.
the preceding year – export and import
growth below the world average. Within
the European Union services trade developments by member differed widely: services exports of France and
Finland are reported to have declined, while those of Luxembourg and Poland expanded by one-quarter or
more.11 The CIS region reports export and import growth rates of commercial services of about 20 per cent,
the fastest growth of all regions.

Asia’s commercial services exports continued for the third consecutive year to expand faster than the
global average and faster than the region’s services imports, thereby reducing the region’s deficit in
services trade. Japan, the region’s largest commercial services trader, increased its commercial services
exports by 12 per cent and its imports by 8 per cent. Among the major Asian traders India continues
to excel in terms of its services trade expansion. While the dynamic growth of India’s commercial – and
in particular software services12 – exports are widely reported, the dynamic expansion of its services
imports attracts less attention even though the growth rate in 2006 exceeded that of exports. According
to the most recent numbers, India’s commercial services imports are only about 5 per cent short of its
commercial services exports.

The commercial services trade of Africa and the Middle East are provisionally estimated to have expanded
close to the world average in 2006, but limitations in data availability could make these estimates subject
to larger revisions than for the estimates provided for other regions.

10
Commercial services data are derived from Balance of Payments statistics which do not include the sales of majority-
owned foreign affiliates abroad (commercial presence).
11
The decline in services exports of France and Finland are concentrated in the group “other commercial services”.
Economic explanations for this decrease have yet to be identified. In the case of Luxembourg the marked rise in
services exports can be attributed to the strength in financial services.
12
Comprising computer services, IT enabled services and business process outsourcing.

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 RECENT TRENDS IN INTERNATIONAL TRADE
Appendix Table 1
World merchandise trade by region and selected country, 2006

AND SELECTED TRENDS IN TRADE

RECENT TRADE DEVELOPMENTS
(Billion dollars and percentage)

Exports Imports
Value Annual percentage change Value Annual percentage change
2006 2000-06 2004 2005 2006 2006 2000-06 2004 2005 2006

World 11762 11 22 14 15 12080 11 22 13 14

North America 1675 5 14 12 13 2546 7 17 14 11

United States 1037 5 13 11 15 1920 7 17 14 11
Canada 388 6 16 14 8 357 7 14 15 11
Mexico 250 7 14 13 17 268 7 16 13 15

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South and Central America a 426 14 30 25 20 351 9 28 23 18
Brazil 137 16 32 23 16 88 7 31 17 14

WORLD TRADE REPORT 2007

Other South and Central
289 13 29 25 22 262 10 27 25 19
America a
Europe 4957 11 20 9 13 5218 11 20 10 14
European Union (25) 4527 11 19 8 12 4743 11 20 9 14
Germany 1112 12 21 7 15 910 11 18 9 17
United Kingdom 443 8 14 11 15 601 10 20 9 17
France 490 7 15 3 6 533 8 18 7 6
Italy 410 9 18 6 10 436 11 19 8 13
Commonwealth of Independent
422 19 36 28 24 278 23 31 25 29
States (CIS)
Russian Federation 305 19 35 33 25 164 24 28 29 31
Africa 361 16 31 30 21 290 14 28 20 16
South Africa 58 12 27 12 13 77 17 35 17 24
Africa less South Africa 303 17 32 34 23 213 14 26 22 13
Oil exporters b 212 19 40 46 25 81 18 33 25 18
Non oil exporters 90 13 20 14 17 131 11 23 20 10
Middle East 644 16 33 35 19 373 14 31 19 14
Asia 3276 12 25 16 18 3023 12 27 17 16
China 969 25 35 28 27 792 23 36 18 20
Japan 647 5 20 5 9 578 7 19 13 12
India 120 19 30 30 21 174 23 37 41 25
Four East Asian traders c 844 9 25 12 15 787 9 27 13 17
Memorandum items:
MERCOSUR 190 14 28 21 16 134 7 38 20 17
ASEAN 771 10 20 15 18 683 10 25 17 14
EU (25) extra-trade 1480 11 21 11 11 1697 11 21 15 15
Developing economies 4274 14 27 22 20 3749 13 29 18 17
Least Developed Countries (LDCs) 108 20 32 36 30 101 15 18 21 17

a
Includes the Caribbean. For composition of groups see the Technical Notes of WTO, International Trade Statistics, 2006.
b
Algeria, Angola, Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan.
c
Chinese Taipei; Hong Kong, China; Republic of Korea and Singapore.

Source: WTO.

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RECENT TRENDS IN INTERNATIONAL TRADE

Appendix Table 2
World commercial services trade by region and selected country, 2006
AND SELECTED TRENDS IN TRADE
RECENT TRADE DEVELOPMENTS

(Billion dollars and percentage)

Exports Imports
Value Annual percentage change Value Annual percentage change
2006 2000-06 2004 2005 2006 2006 2000-06 2004 2005 2006

World 2710 10 20 11 11 2620 10 19 11 10

North America 460 6 13 10 9 401 7 15 9 9

United States 387 6 14 10 9 307 7 16 9 9

South and Central America a 77 9 16 18 14 80 7 14 21 14

A
I

Brazil 18 12 21 28 21 27 9 12 38 20
WORLD TRADE REPORT 2007

Europe 1382 11 20 9 9 1223 10 17 8 8

European Union (25) 1247 12 19 9 9 1132 10 16 8 8
United Kingdom 223 11 25 5 9 169 10 18 10 6
Germany 164 13 17 10 11 214 8 13 4 7
France 112 6 11 6 -2 108 10 19 8 3
Italy 100 10 18 7 13 101 11 12 9 14
Spain 100 12 16 9 8 77 15 24 11 18
Commonwealth of Independent
51 20 29 20 21 74 21 28 19 19
States (CIS)
Russian Federation 30 21 26 21 22 45 18 23 18 17

Africa 64 13 21 12 12 80 13 23 21 12
Egypt 16 9 30 3 10 10 6 24 27 9
South Africa 12 16 16 15 8 14 16 28 18 17

Middle East 63 11 16 14 9 96 12 23 19 10
Israel 19 4 21 10 9 15 4 15 7 8

Asia 614 12 27 14 15 666 10 24 12 14

Japan 121 9 25 14 12 143 4 21 2 8
China 87 ... 34 19 ... 100 ... 31 16 ...
India 73 ... ... ... 34 70 ... ... ... 40
Four East Asian traders b 208 10 22 9 14 197 10 23 10 12

a
Includes the Caribbean. For composition of groups see the Technical Notes of WTO, International Trade Statistics, 2006.
b
Chinese Taipei; Hong Kong, China; Republic of Korea and Singapore.
Note: While provisional full year data were available in early March for 33 countries accounting for more than 60 per cent of world
commercial services trade, estimates for most other countries are based on data for the first three quarters (the first six months in
the case of China).
Source: WTO.

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