Global trade flows rebounded strongly in 2010 following their collapse in 2009. The rise in the volume of goods exports in 2010 was the largest on record, enabling world trade to return to its pre-crisis level but not its long-term trend. Economic conditions continued to improve in both developed and developing economies, but the recovery of both trade and output proceeded more slowly in developed countries.

I. World trade in 2010

Contents A. Introduction 20

B. the state of the world economy and trade in 2010 22

Appendix tables and charts 31

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a. IntroductionWorld trade recorded its largesteverannual increasein2010asmerchandiseexportssurged14.5percent,buoyedbya3.6percentrecovery inglobaloutputasmeasured by gross domestic product (GDP) (seeFigure 1). Both trade and output grew faster indevelopingeconomiesthanindevelopedones.Exportsin volume terms (i.e. in real terms, accounting forchangesinpricesandexchangerates)wereup13percent in developed economies while the increase fordeveloping economies was nearly 17 per cent. Thedifferencebetweentradeofdevelopedanddevelopingeconomieswasevengreaterontheimportside,wheredeveloped economies' imports rose by 11 per centcomparedwith18percentintherestoftheworld.

The factors that contributed to the unusually large12percentdropinworldtradein2009mayhavealsohelped boost the size of the rebound in 2010. Theseinclude the spread of global supply chains and theproduct composition of trade compared with output.Global supply chains cause goods to cross nationalboundariesseveraltimesduringtheproductionprocess,whichraisesmeasuredworldtradeflowscomparedwithearlierdecades.Thequantificationofthiseffectwouldrequire data on trade in value added that are notcurrentlyavailable.Thegoodsthatweremostaffectedby the downturn (consumer durables, industrialmachinery,etc.)havealargershareinworldtradethanin world GDP, which increased the magnitude of thetradeslumprelative toGDP in2009,andwhichhadasimilarpositiveeffectduringtherecoveryof2010.

Higher prices for primary commodities and theextraordinary growth of trade in developing Asia

helped boost the combined share of developingeconomies and the Commonwealth of IndependentStates (CIS) inworldexports to45percent in2010,itshighestever.

China in particular made an outsized contribution tothe recovery of world trade in 2010, as the country'sexportsincreasedbyamassive28percentinvolumetermsandimportsswelledbymorethan22percent.

1. Puttingthetraderecoveryintoperspective

Although the growth of world exports in 2010 was thehighestonrecordinadataseriesgoingbackto1950,itmighthavebeenevenhigheriftradehadquicklyrevertedtoitspre-crisistrend.Thisdidnothappen.Thereboundwas strong enough for world exports to recover theirpeaklevelof2008,butitwasnotstrongenoughtobringaboutareturntothepreviousgrowthpath(seeFigure2).

The3.6percentgrowthrateofworldGDPfor2010isalsolessrobustthanitmightappearatfirstglance. Itwas above its average rate of 3.1 per cent between1990and2008,but itwas far froma record. In fact,world GDP growth equalled or exceeded 4 per centseveral times in recent years, including 1997, 2000,2004 and 2006. Considering the depressed level ofworld output in 2009, growth in this range or higherwouldnothavebeensurprisingin2010.

A number of factors combined to make trade andoutput grow more slowly than they might otherwisehave done. First, curtailment of fiscal stimulus

Figure1: Growth in volume of world merchandise trade and GDP, 2000-10 (Annualpercentagechange)

Source:WTOSecretariat.

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Average export growth1990-2008

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measures in many countries dampened economicactivity in the second half of the year. Europeangovernments in particular moved towards fiscalconsolidation in an attempt to reduce their budgetdeficits through a combination of spending cuts andrevenue measures, with negative consequences forshort-termgrowth.

Secondly, although oil prices stabilized at aroundUS$78/barrel in2010, theywerestillhighby recenthistorical standards (e.g. oil prices averagedUS$31/barrelbetween2000and2005).Priceswerebelow the US$ 96/barrel average seen in 2008, butthey were also up 30 per cent from 2009, raisingenergycostsforhouseholdsandbusinesses.

Finally, persistent unemployment prevented domesticconsumption from rebounding more strongly indeveloped countries and limited income growth andimport demand. The Organisation for EconomicCo-operation and Development (OECD) averageunemploymentratewas8.6percentin2010(upfrom6.1 per cent in 2008), and unemployment remainedatornear9percent in theUnitedStatesthroughouttheyear.

The record expansion of trade and the revival ofeconomic activity in 2010 were certainly welcomedevelopments, but their importance should not beoverstated. Despite the rebound, the negative impactofthefinancialcrisisandglobalrecessionarelikelytopersistforsometime.

Figure2: volume of world merchandise trade, 1990-2010 (Indices,1990=100)

Source:WTOSecretariat.

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B. The state of the world economy and trade in 2010

1. Economicgrowth

World GDP at market exchange rates expanded3.6percentin2010,oneyearafteranunprecedentedcontraction of 2.4 per cent that accompanied thefinancialcrisisin2009.Outputofdevelopedeconomiesrose 2.6 per cent in 2010 after falling3.7 per cent in 2009, while the rest of the world(including developing economies and the CIS) grew7.0percent,upfrom2.1percentin2009(seeTable1).

Growth was stronger in the first half of the year, butweakened in the second half as the sovereign debtcrisisaffectingsmallereuroareaeconomiesrestrainedeconomicgrowth,especiallyinEurope.

Althoughdevelopingeconomiescollectivelyavoidedanoutright decline in 2009, many individual economiessawtheirGDPcontract,forexampleSouthAfrica,Chile,Singapore and Chinese Taipei. However, all of theseeconomiesreturnedtopositivegrowthin2010,andtheonly large developing country that remained mired inrecessionwastheBolivarianRepublicofVenezuela.

GDPgrewfasterindevelopingAsia(8.8percent)thaninotherdevelopingregions lastyear,withChinaand India

registeringstrongincreasesof10.3percentand9.7percent, respectively.South andCentral America also sawvigorousgrowthof5.8percent,drivenbyBrazilsstrong7.5 per cent upturn. However, Africa had the fastestaveragerateofGDPgrowthofanyregionover the lastfiveyears(4.7percentbetween2005and2010).

Developed economies grew more slowly thandeveloping economies, but some performed betterthan others. Concerns about the possibility ofsovereign defaults in Greece, Ireland, Portugal andSpainbroughtrenewedfinancialmarketinstabilityandfiscalausterityinthesecondhalfof2010,whichheldEuropesgrowthratedownto1.9percent,theslowestof any region. The economies of Greece, Ireland andSpain all contracted in 2010, as did Icelands, whichwashitbyabankingcrisisin2008.

ThemajorexceptiontothebelowaverageGDPgrowthin Europe was Germany, whose 3.6 per cent growthrate outpaced all euro area economies and allEuropean Union members except for Sweden andPoland. According to OECD National AccountsStatistics,Germanysnetexportsofgoodscontributed1.4percenttoits3.6percentGDPgrowth,or40percent of the total increase. By comparison, domestic

Table1: GDP and merchandise trade by region, 2007-10 (Annualpercentagechange)GDP exports Imports

2008 2009 2010 2008 2009 2010 2008 2009 2010

World 1.4 -2.4 3.6 2.2 -12.0 14.5 2.2 -12.8 13.5

north America 0.1 -2.8 3.0 2.1 -14.8 15.0 -2.4 -16.7 15.7

UnitedStates 0.0 -2.6 2.8 5.8 -14.0 15.4 -3.7 -16.4 14.8

south and Central Americaa 5.1 -0.2 5.8 0.8 -7.9 6.2 13.2 -16.3 22.7

europe 0.5 -4.0 1.9 0.2 -14.1 10.8 -0.6 -14.2 9.4

EuropeanUnion(27) 0.5 -4.2 1.8 0.0 -14.5 11.4 -0.9 -14.2 9.2

Commonwealth of Independent states (CIs) 5.5 -7.1 4.3 2.0 -5.2 10.1 16.4 -25.6 20.6

Africa 4.8 2.1 4.7 1.2 -4.2 6.5 14.6 -5.0 7.0

middle east 5.3 0.8 3.8 3.5 -4.3 9.5 14.2 -7.8 7.5

Asia 2.8 -0.2 6.3 5.5 -11.2 23.1 4.7 -7.5 17.6

China 9.6 9.1 10.3 8.5 -10.5 28.4 3.8 2.9 22.1

Japan -1.2 -6.3 3.9 2.2 -24.8 27.5 -1.0 -12.2 10.0

India 6.4 5.7 9.7 14.4 -6.8 19.9 17.3 -1.0 11.2

Newlyindustrializedeconomies(4)b 1.9 -0.8 7.7 4.9 -5.7 21.3 3.5 -11.4 18.0

memo: Developed economies 0.2 -3.7 2.6 0.8 -15.1 12.9 -1.2 -14.4 10.7

memo: Developing and CIs 5.7 2.1 7.0 4.2 -7.8 16.7 8.5 -10.2 17.9

aIncludestheCaribbean.bHongKong,China;RepublicofKorea;Singapore;andChineseTaipei.

Source:WTOSecretariat.

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finalconsumptionexpenditureonlycontributed0.7percenttoGDP,or19percentofthetotalincrease.

GDPgrowthintheUnitedStateswasmoresubdued,at2.8percentin2010,whileJapanswasup3.9percent.However,theJapaneserecoveryshouldbeseeninthecontext of the 6.3 per cent drop in output that thecountryexperienced in2009, themostseveredeclineamong leading industrialized economies. Ja