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For the sixth consecutive year, trade growth exceeded output growth by a wide margin.

Among the recently-identified factors behind this trend is the rapid expansion in non-OECD countries of processing trade (assembly of manufactures under special tariff regimes, involving imported components and materials, often in designated export processing zones).

For the fourth consecutive year, Asia's import growth exceeded its export growth.

Central and Eastern Europe was the most dynamic region for trade, with export and import values up by at least one-quarter.

Trade in office and telecom equipment - which now exceeds trade in agricultural products or trade in mining products - was again the most dynamic category of manufactures trade.

Africa and the Middle East recorded their best trade performances in recent years, as exports of mining products picked-up strongly, mainly due to higher prices for fuels and non-ferrous metals.

In value terms, world trade in commercial services increased 14 per cent last year, compared with a 19 per cent increase for merchandise trade. Exports of “other private services” - such as insurance, banking and telecommunications - out-performed exports of tourism and transportation services.

I. Overview of world trade in 1995 and outlook for 1996 See footnote 1
Overview of world trade in 1995

World merchandise exports expanded 8 per cent in volume terms in 1995, modestly below the 9½ percent increase in 1994 but well above the 5½ per cent average annual gain for the previous ten years (Chart 1).See footnote 2 The growth of world merchandise output also slowed modestly, to 3 per cent, compared with the 3½ per cent gain recorded during the strong economic recovery in 1994.See footnote 3 Following the pattern evident since 1990, the expansion of world merchandise trade exceeded by a wide margin the expansion of world merchandise output. With the possible exception of the Middle East, this large gap between trade growth and output growth could be observed in 1995 in all the main regions.

Click here to see a chart of Growth in the volume of world merchandise exports and production, 1984-1985

In 1995, GDP growth in non-OECD Asia, Central and South America, and several of the transition economies continued to be more dynamic than in the OECD countries. The trade of the non-OECD countries also was more dynamic, helping to sustain world trade growth at the second highest level in more than a decade.

In contrast to the marginally slower volume growth, the 19 per cent increase in the value of world merchandise trade in 1995 represented a sharp acceleration from the 13 per cent gain in 1994 (Table 1). The increase - the largest since 1979 - pushed the value of world merchandise exports to nearly $4,900 billion. This acceleration in value growth is due primarily to the strong depreciation of the US dollar vis-à-vis the Japanese yen and many West European currencies, together with the recovery of prices of some major primary commodities, in particular crude oil and non-ferrous metals (see Table 4 below).See footnote 4

Table 1
World exports of merchandise and commercial services, 1993-95

Trade in manufactured goods was again the most dynamic component of world merchandise trade in 1995, led by exports of office and telecom equipment (up more than one-quarter in value terms)See footnote 5 Trade in clothing, on the other hand, expanded significantly less than the average for all manufactured goods.See footnote 6 At the other end of the product spectrum, growth in the value of exports of mining products picked-up strongly in 1995, mainly due to higher prices for fuels and non-ferrous metals. In contrast to 1994, trade in agricultural products expanded at a pace well below that of all merchandise, partly due to last year's smaller price increases for beverages and agricultural raw materials.

One of the factors behind the strong excess of trade growth over output growth is the rapid expansion of processing trade, which for some countries has become a significant factor in the evolution of their trade. Exports originating from the maquiladora industries (mostly along the United States border),which accounted for one-third of Mexico's exports in 1990, increased to nearly 40 per cent in 1995. The corresponding shares for imports by the maquiladora industries rose from one-quarter in 1990 to more than 35 per cent in 1995. By 1995, China's exports originating in processing and assembly factories had risen to nearly 50 per cent of its total exports. The corresponding share for China's imports destined for further processing reached 45 per cent. For some of the smaller traders, the ratios can be still higher. In Tunisia, one of the fastest growing exporters in Africa, exports under the special rules for processing trade accounted for 63 per cent of total merchandise exports in the first nine months of 1995. As processing trade becomes relatively more important, an increasing share of world trade involves goods whose components cross the border more than once before reaching the final buyer.

Another factor is the impact of the revolution in the informatics sector on the product composition of world merchandise trade. In the first half of the 1980s, office and telecom equipment accounted for 5 per cent of world trade (only one-third of the share of agricultural products). By 1995, the share had increased to 12 per cent, which is slightly higher than the share for all agricultural products. The sharply above average export growth of office and telecom equipement is making a bigger contribution to world trade growth in the 1990s than it did in the 1980s because its share (weight) in world trade is considerably larger.See footnote 7

The valuation effect of the dollar's depreciation was also a significant factor behind the acceleration in the growth of world trade in commercial services. On the basis of available information, commercial services exports are estimated to have exceeded $1,200 billion in 1995, up 14 per cent from the previous year (Table 1). As in 1994, the growth of trade in commercial services lagged behind the growth of merchandise trade, a development which can be observed in North America and Western Europe for both exports and imports.

While Asia's exports and imports of commercial services again recorded the highest growth among the regions, the acceleration in the growth of commercial services exports was particularly pronounced in Western Europe. Broken down by major sectors, the available data indicate that travel and transportation services increased less, while other private services (insurance, banking, telecommunications and so forth) expanded faster, than total services.See footnote 8

With both categories of trade growing strongly in value terms, total crossborder trade in goods andcommercial services reached $ 6,000 billion in 1995.See footnote 9

Outlook for 1996

Recent forecasts for 1996 anticipate a very modest acceleration in the overall growth of GDP in the OECD area.See footnote 10 Once again, GDP growth in the non-OECD countries, as a group, is projected to be the most dynamic. Although growth is expected to slow somewhat in non-OECD Asia this year, it will remain well above the global average. Latin America (in particular, Mexico and Argentina), Africa, and Central and Eastern Europe and the former USSR - regions which expanded less rapidly than the world economy in 1995 - are expected to record higher growth rates in 1996 than in 1995.

World GDP growth this year is expected to be not very different from that recorded in 1995. However, considering also that merchandise trade growth was decelerating in the second half of last year, it is projected that the volume of world merchandise trade will expand by about 7 per cent this year.

II. World Trade in 1995 by region and by leading trader
Volume developments by region

Virtually all regions shared in the modest slowdown in the growth in the volume of world merchandise trade last year. On the export side, Latin America is the only region in Table 2 to report accelerated growth. As for imports, every region shown in the table reported slower growth last year, with the slowdown being particularly sharp in North America and Latin America.See footnote 11 Preliminary figures for Africa (not shown in Table 2) suggest that its import volume may have increased faster than in 1994, making it an exception to the pattern evident in the other regions. The volume of imports into Japan last year continued to expand significantly faster than world imports, while Japanese exports once again recorded only marginal growth.

Table 2
Growth in the volume of world merchandise trade by selected region, 1990-95
(Annual percentage change)

    a Hong Kong, Republic of Korea, Malaysia, Singapore, Chinese Taipei and Thailand.

Last year was the second year of recovery from the recession of the early 1990s. Thus it is not surprising that every figure for 1995 on the export side of Table 2, and every figure for 1995 on the import side (with the exception of that for Latin America, affected by the Mexican peso crisis), is above the corresponding average performance during the first half of the decade. The stronger performance in 1995 was especially pronounced for the region comprising Central/Eastern Europe and the former USSR (both exports and imports), Western Europe (imports) and Asia (imports).

As is evident from Chart 1, the slowdown in world trade and output growth between 1984 (the first full year of recovery from the stagnation and recession of the early 1980s) and 1985 was much sharper than the modest slowdown between 1994 (also a first year of recovery) and 1995. Among the differences between then and now are the collapse of central planning and the spread of market-oriented reforms, increased regional integration (for example, NAFTA, MERCOSUR and the European Community's Single Market Program), the increased globalization of economic activity and the successful conclusion of the Uruguay Round. Although it is impossible to determine the extent to which these differences can be credited with the recent better performance of world trade and output, there can be little doubt that they played a role.

The performance of Latin America in 1995, where export growth accelerated and import growth slowed dramatically, is directly related to the crises in Mexico and Argentina.See footnote 12 Mexico's merchandise exports are estimated to have increased by more than one-quarter and those of Argentina by about 20 per cent. Imports into both countries, in contrast, declined by about 15 per cent in volume terms, after having increased in 1994 at twice the world average of 9½ per cent. If Mexico and Argentina are excluded from the Latin American aggregate, the remaining members report a very sharp deceleration of exports and a sharp rise in imports (in particular, Brazil's exports decreased while its imports surged by more than one-third in volume terms).

Growth in the volume of North America's imports slowed sharply in 1995 to 7½ per cent (import growth was less than the global average for the first time since 1991). For merchandise exports, the moderate overall deceleration in growth from nearly 10 per cent in 1994 to 8½ per cent is entirely attributable to the sharp slowdown in Canada's export volume growth (from 16 per cent in 1994 to 8½ per cent in 1995). The volume of exports from the United States is estimated to have increased by 8½ per cent in 1995, somewhat faster than in 1994.See footnote 13

Despite a slower growth in West European domestic demand (around 2 per cent), the volume of merchandise imports in 1995 was up 7½ per cent. The slowdown observed for the EU (15) and in particular for Germany, the United Kingdom and Italy was partly offset by an acceleration of imports into the Netherlands, Spain and Turkey. Western Europe's merchandise exports expanded by 7 per cent, somewhat less than the global average due to the marked slowdown in extra-regional exports. A rather sharp deceleration could be observed for export growth in Germany and the United Kingdom,while in Italy and Austria export growth exceeded 10 per cent.

The Central and Eastern Europe and the former USSR region continued to expand its exports at rates well above the world average for the third consecutive year. As regards imports, growth is estimated to have remained below that of exports, also for the third consecutive year. For Central and Eastern Europe alone, export and import growth is estimated to have been significantly faster than for the region as a whole, reflecting the progress made in the transition process and the higher degree of integration of these countries with Western Europe.

Although Asia's import growth of 13 per cent in 1995 was somewhat less than in 1994, it exceeded the world average for the fourth consecutive year. It was also the fourth consecutive year in which the volume of imports into Asia expanded more rapidly than Asia's exports. The slowdown in imports affected all major countries with the possible exceptions of Thailand and Indonesia. Japan's imports continued to expand strongly despite the sluggish growth of domestic demand. Although there was a slight deceleration in the imports into the six East Asian traders, the group as a whole reported an expansion of imports nearly twice the world average. Within this group, Chinese Taipei continued to record the smallest volume increase (6½ per cent in 1995) while the Republic of Korea and Malaysia reported a volume increase of more than 20 per cent for the second year in a row. Although there are no official volume data available on China's import growth, it can be estimated that import growth remained well below the Asia region's overall import expansion in 1995, despite China's above-average GDP growth.

As for Asia's export volume growth, the deceleration to 9½ per cent observed in 1995 is attributable mainly to the marked deceleration in the exports of China, Singapore, Australia and Indonesia. Although Japan's export growth edged up marginally in 1995 (to 2½ per cent), it remained sharply below the world average for the fifth consecutive year.

Value developments by region

In judging the significance of the figures for the growth in the value of the trade, it is important to keep in mind that the valuation effect of the dollar's depreciation varied considerably among regions and countries. Statistics for North America were hardly affected, while those for Japan and Western Europe were strongly affected. The impact elsewhere was in between, depending on the extent to which trade is invoiced in US dollars, yen or West European currencies.See footnote 14

Merchandise exports from Latin America, Western Europe and the region comprising Central/Eastern Europe and the former USSR expanded faster than world exports last year (Table 3).See footnote 15 Although Africa's and the Middle East's exports expanded at below average rates, they achieved by far the biggest improvement over the 1994 performance among seven regions. North America's exports also expanded below the world average, as did Asia's exports due to the relatively weak performance of some major traders in the region (including Japan, Australia and, in particular, Hong Kong for domestic exports).See footnote 16 Among the regions and countries in Table 3, China was the only one to record a slowdown in the growth of exports in 1995 (nevertheless, its exports still expanded considerably faster than the world average and faster than its own import growth).

Table 3
Growth in the value of world merchandise trade by region, 1990-95
(Billion dollars and percentage)

     a Hong Kong, Republic of Korea, Malaysia, Singapore, Chinese Taipei and Thailand.

On the import side, Asia, Western Europe, Africa and the region comprising Central and Eastern Europe and the former USSR, all reported import growth above 20 per cent. Last year was the fourth consecutive year in which, on a value basis, Asia's import growth exceeded its export growth (as was noted above, this is also true on a volume basis). Once again, the Middle East recorded the lowest import growth among all regions, hardly enough to offset higher import prices. The above average import growth in Africa is due to the sharp acceleration in South Africa's imports, which rose by 30 per cent in 1995. The slowdown in GDP growth in North America and Latin America last year resulted in those two regions being the only ones to record a slowdown in import growth relative to 1994 (in both instances, the growth rate was below the world average). In the case of Latin America, the deceleration is due to the absolute decline in Mexico's and Argentina's imports. Excluding these two countries, Latin America's import growth accelerated at a rate above the global average.

The sharp improvement in the export performances of Africa and the Middle East is largely the resultof an increase in the price of crude petroleum, following four consecutive years of declining prices, and a second consecutive year-over-year strong increase in the prices of minerals and non-ferrous metals (Table 4).See footnote 17 Despite the improved performance, the exports of Africa and the Middle East continued to expand at rates below the world average.

Table 4
Export prices of primary commodities, 1990-95
(Annual percentage change)

Note: The data in this table refer to changes in spot market prices, which may differ significantly from the corresponding unit values which, in principle, measure the average price for all transactions in a given period.
Source: IMF, International Financial Statistics and WTO calculations.

Between 1990 and 1994, intra-regional trade in North America, Asia and Latin America expanded faster than extra-regional trade, while the opposite was observed for Western Europe and Central/Eastern Europe and the former USSR.See footnote 18 In 1995, the available data again point to a faster increase in intra-regional trade for Asia and Latin America. This was also true for Western Europe in 1995, while in North America last year extra-regional trade expanded somewhat more rapidly.

The development of the share of intra-regional trade of the EU was very similar to that of Western Europe. Between 1990 and 1994 intra-trade expanded less rapidly than extra-trade for the EU (12), while last year the intra-trade of the EU (15) is estimated to have grown faster than extra-trade. Intra-NAFTA trade expanded less rapidly in 1995 than NAFTA's extra-regional, while for the MERCOSUR countries intra-regional trade growth continued to exceed the growth of trade with the rest of the world.

Last year witnessed the enlargement of the European Union to 15 member countries. The EU (15) currently accounts for more than 40 per cent of world merchandise exports and imports, while its intra-trade alone exceeds one-quarter of world merchandise exports.See footnote 19 The share of intra-EU trade is close to two-thirds of the EU's total trade. The corresponding share for NAFTA is nearly 50 per cent and that of MERCOSUR somewhat above 20 per cent.

Despite the relatively large movements in exchange rates between 1994 and 1995, the rankings of the world's 30 leading merchandise exporters and importers changed very little - among the top 15 traders, for example, there was an increase of one rank by the Netherlands and the Republic of Korea for both exports and imports (Appendix Table 1). In 1995, 11 of the 30 leading traders reported a growth of 25 per cent or more in exports or imports, or in both. In five instances (the Republic of Korea, Malaysia, Netherlands, Spain and Sweden), both growth rates exceeded 25 per cent; and in two instances (Austria and Thailand), one growth rate exceeded 25 per cent and one was very close to 25 per cent. In two cases, a very strong expansion of exports was coupled with weak (Russian Federation) or negative (Mexico) import growth (Mexico was the only one among the 30 leading importers to experience an absolute decline in the value of imports last year). And in two cases (Brazil and Indonesia), a very weak expansion of exports was coupled with a very strong increase in imports.

Appendix Table 1
Leading exporters and importers in world merchandise trade, 1995

Appendix Table 2
Leading exporters and importers in world merchandise trade (excluding European Union intra-trade), 1995

Appendix Table 3
Leading exporters and importers in world trade in commercial services, 1994

Footnote: 1This is the WTO Secretariat's first examination of the evolution of world trade in 1995, based on statistics available as of early March. A more detailed and extensive analysis will be published in November in a new and expanded WTO Annual Report. The Technical Appendix to last November's International Trade, Trends and Statistics 1995 provides explanatory notes for the statistics in this press release.

Footnote: 2It is not possible to make credible estimates of growth rates for the volume of world trade in commercial services. An estimate of the growth in the value of trade in commercial services is given below.

Footnote: 3Merchandise output growth is estimated on the basis of global production indices for agriculture, mining and manufactures. In contrast to GDP, services and construction are not included.

Footnote: 4In 1995, the US dollar depreciated against the Japanese yen and the ECU by 8 and 9 per cent, respectively, which automatically raises the dollar value of trade flows invoiced in those (and other appreciating) currencies.

Footnote: 5Global shipments of semi-conductors rose by 40 per cent in dollar terms reaching $155 billion, while global shipments of personal computers rose by 25 per cent to nearly 60 million units (global shipments comprise domestic and sales abroad). Source: Dataquest as quoted in the Neue Zürcher Zeitung of 10 and 30 January 1996.

Footnote: 6The slowdown is particularly pronounced in the case of the two largest clothing exporters, China and Hong Kong, which increased their clothing exports by less than 2 per cent in 1995. The United States, which is the world's largest importer of clothing, recorded an increase of 7½ per cent last year after a 26 per cent gain in 1994.

Footnote: 7The world's trade-output ratio will increase even if there is no rise in the trade-output ratio of this sector. It is sufficient that the weight of this sector with its above average trade-output ratio increases. The contribution of office and telecom equipment to the volume of global trade growth is even stronger than the one indicated by the shares based on value, as relative prices for this product group have tended to decline.

Footnote: 8International tourism receipts are estimated to have increased by 7.2 per cent to reach $372 billion in 1995 after an increase of 10.2 per cent in 1994. Above average growth in tourism receipts was recorded in Asia, the Middle East and to a lesser extent in Western Europe, while those of North America actually decreased. (Source: World Tourism Organization, International Tourism Overview, Highlights 1995, Madrid 1996.)

The OECD Secretariat has estimated that tourism receipts (expenditures) of OECD countries rose by 9.7 (11.0) per cent in 1995 after 5.4 (7.3) per cent in 1994. Despite this nominal acceleration, the volume increase in tourist receipts is estimated to have decelerated from 4 per cent in 1994 to 2 per cent in 1995. (Source: OECD press release, March 1996.)

Footnote: 9Statistics for commercial services are taken from balance-of-payments statistics, while the statistics for merchandise trade are taken from customs data. Because the two sets of data are not directly comparable, the combined figure for the two categories of trade must be treated as a rough estimate.

Footnote: 10This paragraph is based primarily on the OECD Economic Outlook, December 1995.

Footnote: 11Throughout this report, North America comprises Canada and the United States.

Footnote: 12The share of Mexico and Argentina in Latin America's total merchandise exports (imports) was 45 (37) per cent in 1995.

Footnote: 13There are different methods of deflating United States merchandise trade, which tend to result in significantly different estimates of changes in the volume of United States merchandise trade. United States export and import prices rose by 5 and 4½ per cent while export and import unit values both stagnated in 1995. Because price indices are used by the WTO Secretariat to deflate the value figures, the Secretariat's volume estimates for the United States trade indicate lower trade volume growth rates than are reported by certain other sources (including the United States Department of Commerce and the OECD Economic Outlook).

Footnote: 14In general, changes in volume figures are a more reliable guide to the production and employment effects of trade than are value figures, especially in years in which there are large movements in the exchange rates of major currencies against the US dollar.

Footnote: 15Figures for the top 30 traders of commercial services in 1995 are not yet available. Appendix Table 3 lists the leading exporters and importers of commercial services in 1994.

Footnote: 16Japan's relatively weak export performance in 1995, coupled with a growth of imports above the world average, caused the annual trade surplus to decline for the first time in five years and the current account surplus to decline for the second consecutive year.

Footnote: 17Fuels account for about 40 per cent and 70 per cent of the merchandise exports of Africa and the Middle East, respectively. Exports of minerals and non-ferrous metals account for another 5 per cent of Africa's merchandise exports.

Footnote: 18The shares and growth rates for intra-regional trade are based on export and imports combined.

Footnote: 19See Appendix Table 2 for the ranking of the world's 30 leading merchandise exporters and importers when intra-European Union trade is excluded from EU trade and total world trade.