GATT sees trade growth of up to five percent in 1994

GENEVA (Reuter): World trade should expand by 2.5 to five percent this year, depending on the extent and timing of economic recovery in Japan and Western Europe, the GATT trade body forecast yesterday.

The General Agreement on Tariffs and Trade (GATT) said that in volume terms, global exports grew by 2.5 percent in 1993, slowing their rise after expanding 4.5 percent a year earlier.

In value terms, merchandise trade dropped by two percent to $3.58 trillion last year.

Slack trade growth was due mainly to recession in Western Europe, where exports and imports fell for the first time in 40 years, according to an annual report by GATT economists.

It said that relatively low rates of domestic inflation in Western Europe also affected 1993 trade figures.

"If forecasts of a mild recovery turn out to be correct, the volume of world merchandise trade could expand by more than five percent this year," GATT said in "International Trade 1993".

"If, instead, delays occur in the recovery of Western Europe or in Japan, trade growth is likely to be closer to last year's 2.5 percent," the 20-page report added.

GATT said that while figures for Japan and Western Europe suggested recessionary pressures had receded by the end of 1993, it was too early to tell whether economic growth had resumed.

Trade in services -- including tourism, transport, telecommunications, insurance and banking -- could have grown by a modest three percent last year to US$1.03 billion, according to preliminary GATT estimates. This would be well below a 12 percent leap in 1992.

Output

World output growth is estimated to have increased slightly last year to just below two percent, less than trade growth.

Asia, Latin America and North America, for the second straight year, reported growth in import volumes well above the global average of 2.5 percent. Asian imports grew by 10.5 percent, Latin American eight and North American 11 percent.

Latin America showed the biggest growth in export volumes, up 9.5 percent last year, followed by Asia with six percent.

In value terms, Asia recorded the highest rate of increase for exports, 7.5 percent, due partly to the yen's appreciation against the dollar despite lower Japanese export volumes.

Low demand in several European states, such as Germany, France and Italy, and the dollar's appreciation against major currencies combined to produce the largest decline (10 percent) in the dollar value of the region's trade in the postwar period.

Trade among the 12 member states of the European Union combined with their trade with third countries accounts for about 40 percent of world merchandise trade.

Imports from all other regions combined expanded at 7.5 percent last year, according to the report.

Trade activity remains relatively weak in Africa, the Middle East, Central and Eastern Europe and republics of the former Soviet Union. But Latin America is enjoying greater economic activity, especially where reform programs are well under way.

North American exports grew by 5.5 percent in volume terms in 1993, against eight percent a year earlier.

Canadian and U.S. imports jumped by 11 percent in volume terms, against eight percent the previous year, partly because of a sharp surge of electronic product imports.