Global Exports Boomed Last Year -- But Don't Count On It Lasting
In a brisk and likely temporary rebound, U.S. exports boomed last year, soaring 15.4 percent, the biggest rise since 1950, according to a new report from the World Trade Organization.
Globally, exports were up by 14.5 percent last year, according to the World Trade Organization annual report.
U.S. exports rapid growth came after a 14 percent slump in 2009 as the economy began to shake off the effects of the financial crisis.
Developed economies recorded export growth of nearly 13 percent in 2010, compared to a 16.5 percent average increase in the rest of the world. China, for example, increased exports in 2010 by 28 percent.
The boom, however, may not last. The WTO's forecast for global export growth this year is little less than a half of last year's growth, at 6.5 percent -- but some economists worry that even this number could be high.
"I think it's a reasonable forecast for 2011. But, look, we just finished one quarter, and it was a pretty hectic quarter that very much effected world trade," said Bernard Baumohl, chief global economist at The Economic Outlook Group.
With violent protests in the Middle East pushing up energy prices, rising food prices throughout the world, European governments facing financial instability and a series of catastrophes rocking Japan, the WTO report acknowledges that the short-term outlook on global trade is clouded and difficult to gauge.
"The problem is you can come up with a number of credible scenarios that could slow the global economy even more, in which case the 6.5 percent would be too high," Baumohl continued. "So there are a lot of variables, there are a lot of dynamics in play -- we have much more uncertainty about how the global economy will perform in coming months than in an other time in recent history."
For Baumohl, one standout point is that there is a fundamental shift in the global economy: It's the emerging countries that will largely be responsible for growth in world trade. A huge percentage of consumers are outside the United States -- in India, China and Brazil -- and similarly large portion of GDP growth will come from those countries rather than the United States or Europe.
"The hangover from the financial crisis is still with us," WTO Director-General Pascal Lamy said in a press release, where he also cautioned WTO members to continue to be vigilant, "resist these pressures and work toward opening markets rather than closing them. 'Stability' should be the name of the game for 2011."
The chart below shows the growth in volume of world merchandise trade over the past decade -- the average annual growth since 1990 has been 6 percent.
"There are many questions right now that remain unanswered for 2011 because the geopolitical crises seems to continue and the violence in the Middle East is getting worse," Baumohl said. "The big question overriding everything is: to what extent will rising food and energy prices slow world trade?"
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First Posted: 04/07/11 02:23 PM ET Updated: 06/07/11 06:12 AM ET