Bridges Weekly Trade News Digest • Volume 14 • Number 3 • 27th January 2010

New Reports from OECD, IMF Reveal a Recovering Economy

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Trade flows in developed countries steadied in the second quarter of 2009 then began to grow in the third quarter, but trade levels are still much lower than in 2008, according to today’s release of quarterly trade data from the Organisation for Economic Cooperation and Development (OECD).

The volume of exports from the Group of Seven (G7) countries - Canada, France, Germany, Italy, Japan, the United Kingdom, United States - was up five percent since the second quarter, but compared to the third quarter of 2008, export volume had decreased 17.5 percent, according to the report.

G7 import volume followed the same pattern, increasing 3.1 percent since 2009’s second quarter but falling 14.6 percent since the third quarter of 2008.

The value of exports from the 30 OECD countries increased 7.8 percent in comparison to the second quarter of 2009, and the value of their imports rose by 8.7 percent.

The trend is noticeably similar across the countries, stated the OECD’s report, which supports the idea of a “synchronised trade collapse, followed by stabilisation and slight recovery.” The Paris-based research organisation noted that net trade balances between G7 countries do vary significantly.

Trade values are now similar to the levels experienced in November 2008, indicating economic recovery. However, trade flows are still significantly lower in value than in the summer of 2008, before the onset of the financial crisis.

In light of the observed third-quarter growth, the International Monetary Fund revised its 26 January global economic forecast upwards since its October 2009 estimate, predicting 3.9 percent growth in 2010 and 4.3 percent growth in 2011. The new forecast is three-quarters of a percentage point higher.

The world economy is recovering faster than expected, the IMF said, although the recovery is occurring at different rates, depending on the region. The advanced economies are improving gradually, while the IMF characterised Asia’s recovery as “vigorous.”

The IMF stressed the importance of a “differentiated response” which would take into account the varying needs of different countries.

Advanced economies are still dependent on government stimulus measures. An unexpected increase in US consumption and the rebuilding of corporate inventories has increased their confidence, but they remain plagued by high unemployment rates and growing public debt, according to the IMF report.

For more information on OECD statistics on trade in goods, including detailed monthly trade statistics, trade in services, balance of payments statistics, trade indicators and trade expert meetings, please see International Trade and Balance of Payments Statistics.

ICTSD reporting; “Data Snap: OECD Trade Flows Rose Sharply In 3Q,” THE WALL STREET JOURNAL, 27 January 2010.