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PRESS/175
6 April 2000
DEVELOPING COUNTRIES' MERCHANDISE EXPORTS IN 1999 EXPANDED BY 8.5% -
ABOUT TWICE AS FAST AS THE GLOBAL AVERAGE
Developing countries’ merchandise exports in 1999 expanded by 8.5 per cent or about two
times faster than the global average. Throughout the 1990s, developing countries’ exports rose faster
than world trade, with the exception of 1998. In 1999, the share of developing countries was 27.5 per
cent for merchandise exports and 23 per cent for commercial services exports, both being more than 4
percentage points higher than in 1990.
Among the least-developed countries, merchandise export growth differed sharply again in
1999. Exporters of manufactured goods like Bangladesh, Cambodia and Haiti expanded their exports
faster than world trade. Oil exporters, such as Angola and Yemen, benefitted from the oil price hike
and increased their exports by more than one third. While, non-fuel commodity exporters, faced with
declining commodity prices, tended to record lower export values.
Global commercial services trade accelerated only slightly in 1999, as the recovery in Asia
and higher growth in North America were partly offset by lower growth in Western Europe and an
import contraction in Latin America and the transition economies.
These are among the findings of the WTO’s preliminary report on trade developments in
1999 and the outlook for this year (full report is attached). Other highlights include the following:
• Global output and trade strengthened considerably in the second half of 1999 , thereby
improving the prospects for higher growth in the current year.  The recovery in Asia and
continued high demand growth in  North America contributed most to global trade expansion last
year.
• World commodity output in 1999 increase d by 1.5 per cent, the same as in 1998 .  A fall in
mining sector output (in particular oil) contra sted with stronger growth in the manufacturing
sector (e.g. electronic goods and automobiles).  The global output of  services industries exceeded
commodity output growth.  World GDP growth increased from 2 in 1998 to 3 per cent in 1999.PRESS/175
Page 2/3
MORE• Trade benefitted from the stronger economic activity .  Although for the year as a whole
merchandise trade expanded in volume terms at the same rate as in 1998 (4.5 per cent), the pace
of the expansion in the fourth quarter exceeded the average rate of 6.5 per cent recorded in thenineties.
• International capital markets remained buoyant .  Global FDI flows surged to a new record
level of 800 billion dollars, driven by an exceptionally large value of cross border mergers andacquisitions.  The sharp rise in global capital flows was largely concentrated among developed
countries.  Private net capital flows to emerging markets are estimated to have stagnated in 1999at about 150 billion dollars.
• Nominal and real effective exchange rates recorded major variations , leaving their mark on
trade flows.  While the euro and most European currencies weakened vis-à-vis  the US dollar,
many East Asian currencies, in particular the Japanese yen, the Korean won and the Thai baht,
appreciated markedly.
• Average prices of internationally traded goods declined slightly .  The weakness of the Euro
contributed largely to the fall in Western Europe's dollar export prices and a decrease in the prices
of manufactured goods.  Non-fuel commodity prices  continued to weaken further, thus affecting
the earnings of many raw material exporters.  Oil prices, which had fallen sharply in 1998,
recovered strongly in 1999 due to a cutback in oil output and an increase in global demand.
• World merchandise trade value increased by 3.5 per cent in 1999 , faster than commercial
services trade.  Nevertheless for the 1990-99 period as a whole, commercial services trade still
expanded slightly faster than merchandise trade.
• Thanks to oil price developments , the highest export value growth of all regions in 1999 was
recorded in the Middle East and Africa.  However, this strong expansion last year did not fullyoffset the declines recorded in 1998.
• Merchandise imports grew at double-digit rates in North America and Asia , stagnated in
Western Europe and Africa and decreased by about 10 per cent in the transition economies and inLatin America (excluding Mexico).
• Merchandise export growth among the LDCs differed sharply again in 1999 .  Oil exporters
such as Angola and Yemen benefitted from the oil price hike and increased their exports by more
than one-third.  Exporters of manufactured goods like Bangladesh,  Cambodia, Haiti andMyanmar expanded their exports faster than world trade.  Non-fuel commodity exporters faced
with declining commodity prices tended to record lower export values.
• Developing countries' merchandise exports expanded by 8.5 per cent  or about two times
faster than the global average.  Throughout the 1990s developing countries' exports rose faster
than world trade, with the exception of 1998.  In 1999, the share of developing countries was 27.5per cent for merchandise exports and 23 per cent for commercial services exports, both being
more than 4 percentage points higher than in 1990.
• Commercial services trade accelerated only slightly in 1999 , as the recovery in Asia and
higher growth in North America were partly of fset by lower growth in Western Europe, and an
import contraction in Latin America and the transition economies.PRESS/175
Page 4
MOREWORLD TRADE DEVELOPMENTS
Main Features
A strengthening of world economic output in 1999 reversed the slowdown of world trade in
the first half of 1999 and led to a dynamic expansion of trade in the second half.  For the year as awhole, the real growth of world trade remained unchanged from the preceding year and was below the
average trade expansion recorded throughout the 1990 s.  Although trade growth continued to exceed
both the growth in world commodity output and world GDP, the excess margin between the growth
rates remained smaller in 1999 than those observed during the 1990-1997 period.
Demand in the United States and the Asian recovery were the motors of the global trade
expansion in 1999.  The outstanding strength of Un ited States investment and private consumption
benefitted not only the NAFTA region, but also sustained the recovery in Asia and to a lesser extent
output in Western Europe.  A major factor behind the excellent performance of the United States
economy and the unprecedented length of the current expansion has been the high level of investment
in information technology, the backbone of the "new economy".  Excitement about the growthpotential of the new economy has attracted large capital inflows and contributed to an extraordinary
boom in the creation and valuation of high-tech companies.  While the high rate of investment has
increased production capacity and stimulated productivity growth of the United States economy, the
question arises for how long high output and de mand growth can be sustained without leading to
inflationary pressures.  A further risk to the strong economic expansion in the United States couldarise from the widening of the current account deficit,  which points to the increasing role of foreign
savings in sustaining United States demand growth.  An erosion of investor confidence in the outlook
for the United States economy could lead to lower capital inflows and trigger a correction in the dollar
rate and the stock markets.024681012
90 91 92 93 94 95 96 97 98 99Chart II.1
Growth in the volume of world merchandise trade and GDP, 1990-99
(Annual percentage change)
Merchandise exports  World GDPPRESS/175
Page 5
MOREThe recovery in Asia was stronger than expected and led to double-digit real import growth in
1999.  GDP growth was uneven among the economies in the region, ranging from 11 per cent in thecase of the Republic of Korea to stagnation in the case of Indonesia.  In many countries economic
growth was sustained by fiscal stimulus, replenishment of inventories and a rebound in the global
demand for electronic goods.
The information technology sector and the automobile industry both recorded strong global
output growth.  Within the information technology s ector, the unit sales of personal computers rose by
22 per cent to 114 million units, and the dollar value of global sales of semi-conductors expanded by
18 per cent, to a new record level of 160 billion dollars.  One of the most dynamic branches of the
global information technology industry in 1999 was mobile phones.  It is estimated that world-widesales of cellular mobile phones reached 283 million units, an increase of two-thirds over 1998 sales.
1
New registrations of passenger cars are estimated to have expanded by 5.5 per cent, lifting theproduction of passenger cars to a new all time high of 48.6 million units in 1999.
2  Although trade
data by product group are still incomplete, there is no doubt that exports of automotive products and
of office and telecom equipment have expanded significantly faster than the global average.
                                                     
1 Gartner Group Dataquest, Press Releases, various issues.
2 Financial Times, 29 February 2000.Chart II.2  Trade contraction and recovery in Asian crisis countries, 1997-99
(Percentage change in dollar values over the previous year)
-30-20-100102030
Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99Imports ExportsMerchandise imports and exports of Japan-40-30-20-100102030
Q1-97 Q2-97 Q3-97 Q4-97 Q1-98 Q2-98 Q3-98 Q4-98 Q1-99 Q2-99 Q3-99 Q4-99Merchandise imports and exports of the group of Asia (5) countriesa
a Indonesia, the Rep. of Korea, Malaysia, Philippines and Thailand.PRESS/175
Page 6
MOREDevelopments in world financial markets continued to influence global trade developments
through shifts in the direction of international capital flows and their impact on exchange rate
changes.  Global FDI flows have surged by about 25 per cent, to some 800 billion dollars.3    FDI
inflows in Asia stagnated or rose only marginally, while the United States recorded net FDI inflows of
130 billion dollars.4  The main factor behind the increase in global FDI flows was the exceptional
wave of cross-border mergers and acquisitions.
While the United States attracted an unprecedented level of capital inflows, which financed
its widening current account deficit, net private capital flows to the major emerging markets are
estimated to have stagnated at 150 billion dollars in 1999.5
The increase in the United States  current account deficit caused by increased imports can be
seen as a positive cyclical element in the world economy as it allows output and employment to besustained in foreign export industries facing excess capacity.  At the same time, the deficit eases
inflationary pressures in the United States  where labour and productive capital are increasingly
scarce.  However, what is beneficial in a certain cyclical situation might be difficult to sustain in the
medium term.
In particular, a large current account surplus of the developing countries vis-à-vis  the United
States (or any other high income country) is hardly a desirable feature over a longer period.  Why is
this so when most governments seem to favour a current account surplus over a deficit?  A current
account surplus implies that net capital (= savings)  from the developing countries flows to other
countries where it supports investment and/or consumption.  A more desirable situation for thedeveloping countries is a current account deficit (and a rising trade volume), and a concurrent inflow
of capital that is used to enlarge (profitable) production capacity.  If the capital inflow is used
primarily for consumption, increased debt and debt servicing costs are unlikely to be sustainable.
The present large net capital inflows into the United States reflect, on the one hand, that
foreign investors expect investment returns to be higher in the United States than elsewhere, and on
the other, that United States  consumers are spending an historically high share of current income
(encouraged by its increased financial wealth), while United States companies maintain a high level of
capital spending.  A reversal in foreign investors' appreciation of future earnings in the United States
or a cutback in United States consumption or investment growth could rapidly change the size of theUnited States current account deficit, which in 1999 was equivalent to 3.7 per cent of GDP - a historic
record level.
Prices of internationally traded goods  decreased slightly as the increase in oil prices was
offset by a further decrease in the prices of non-fuel commodities and manufactured goods.  Among
the non-fuel commodities, prices of food and beverages decreased by more than 15 per cent while
those of agricultural materials and metals remained roughly unchanged, although they started tostrengthen in the second half of 1999. Despite this partial price recovery, the annual average prices of
non-fuel commodities fell to a ten year low.  The decrease in the dollar price of manufactured goods
can be attributed to the fall in prices of office an d telecom equipment as well as the strength of the
United States dollar vis-à-vis  the euro and the near absence of inflation in the goods sector of all
major economies.
                                                     
3 UNCTAD, Press Release, 8 February 2000.
4 U.S. Dep. of Commerce, BEA News Release, 15 March 2000.
5 Institute of International Finance, Capital Flows to Emerging Market Economies, 24 January 2000.PRESS/175
Page 7
MOREGiven that oil prices tripled from 10 dollars per barrel in February 1999 to 30 dollars in the
first quarter of 2000, concerns about a resurgence of consumer prices are understandable.  However,
the marked reduction in the oil intensity of output in the industrial countries - by about 40 per cent
since the first oil price hike more than 25 years ago - has reduced this risk considerably.  The
increased role of natural gas in world fuels trade has also contributed to moderate the increase in
import prices of fuels.6 While the impact of the rebounding oil prices have been small on consumer
prices in 1999, the impact was dramatic on the export revenues of the oil exporters.  The Middle East
recorded export growth in excess of 20 per cent in 1999, but this did not fully offset a corresponding
decline in 1998.
                                                     
6 Import prices of natural gas decreased in several countries in 1999 as these prices are often adjusted
to the oil price with some delay.406080100120140160
Jan-97 Mar May Jul Sep NovJan-98 Mar May Jul Sep NovJan-99 Mar May Jul Sep NovJan-00(a) Non-fuel commodit ies
(b) Crude pet roleum
(average)Chart II.3 Recent Commodity Price Developments, January 97- January 2000
(Indices, January 1997=100)
Source :  IMF, International Financial Statistics.PRESS/175
Page 8
MOREWORLD TRADE IN 1999
1. Global trade and output developments
While the negative impact of the financial crisis in Asia and Latin America on output and
trade flows were initially underestimated, the more sober projections for 1999 turned out to be toopessimistic.  Output of developing countries in Asia rebounded by 6 per cent, Russian GDP
recovered by 3 per cent and Brazil's economy achieved positive growth for the full year of 1999.  The
United States economy again provided a major stimulus to world trade last year as domestic demand
grew by 5.5 per cent.  By contrast, the Japa nese economy stagnated and Western Europe's GDP
growth decelerated to 2 per cent.
On a sectoral basis, preliminary data suggest that mining output decreased as crude oil
production was cut back by 1.5 per cent and agricultural output rose for the second year in a row by
only about 1 per cent.  Manufacturing output reco vered and expanded by about 2.5 per cent.  The
highly divergent growth rates of regional demand and sectoral output left their mark on global trade
flows, which also differed strongly by region and sector.
The value of world merchandise trade rose by 3.5 per cent in 1999 and amounted to 5.45
trillion dollars.  Average trade prices decreased for the third year in a row, although the decrease in
1999 was much smaller than in preceding years.
Trade in commercial services rose by 1.5 per cent in 1999 and thereby less rapidly than merchandise
trade.  Price data for United States commercial services point to a moderate increase in prices for
internationally traded services.  This implies that the expansion of exports of commercial services has
probably also lagged behind merchandise export growth in volume terms.
World exports of merchandise and commercial services, 1997-99
Value Annual change
1999 1997 1998 1999
Merchandise 5460 3.5 -1.5 3.5
Commercial services 1340 4.0 0.0 1.5
2. Merchandise trade
A detailed review of world merchandise trade by product group in 1999 is not yet feasible at
the time of writing this report.  However, partial information indicates that  rebounding oil prices haveled to an increase of world fuels exports in excess of 20 per cent.  Above average growth was also
recorded for office and telecom equipment and automotive products.  Primary products, other than
fuels, on average experienced price declines in 1999.  Taking into account moderate demand growth,
the global value of non-fuel primary products has probably stagnated or changed only very little from
the preceding year.
7
Preliminary data on merchandise trade by region are provided in Tables II.2 and II.3.  The
large variations in import volumes by region  largely reflect the differences in regional demand and
                                                     
7 The value of United States  agricultural exports decreased by 6 per cent while corresponding imports
increased by 5.5 per cent.PRESS/175
Page 9
MOREoutput growth.  As can be seen from Table II.2, North America and Asia recorded import growth
slightly above 10 per cent or two times faster than the global average.  While for North America thiswas the third year in a row in which import growth exceeded 10 per cent, the developments in Asia
illustrate the strength of the region's recovery, which offset the sharp import contraction in the
preceding year.  While imports of Asia recovered, those of Western Europe recorded a marked
deceleration.  The transition economies as a group recorded a 10 per cent contraction due to the sharp
cut back of imports into Russia and the Ukraine.  Imports of Africa and the Middle East changed littlein real terms in 1999, also reflecting poor export earnings in recent years.
Table II.2
Growth in the volume of world merchandise trade by selected region, 1997-99
(Percentage change)
Exports Imports
1997 1998 1999 1997 1998 1999
World  a 10.5 4.5 4.5 … … …
North America 11.0 3.5 4.5 13.0 10.5 10.5
Latin America 11.5 7.5 7.0 22.5 8.5 -2.0   Mexico 19.5 11.0 13.5 28.0 15.5 15.0
   Other Latin America 6.5 5.5 2.0 20.0 4.5 -12.0
Western Europe 9.5 5.5 3.5 9.0 8.5 3.5   European Union (15) 9.5 6.0 3.5 8.5 8.5 4.0
Transition economies 10.5 5.0 -3.0 13.5 5.0 -10.0
Asia 13.0 3.5 6.0 5.5 -8.5 9.0   Japan 12.0 -1.5 2.0 1.5 -5.5 9.5
   Asia (5)  b 16.5 13.0 11.5 3.0 -22.5 17.5
a  Average of export and import growth.
b   Indonesia, the Republic of Korea, Malaysia, Philippines and Thailand.
Note :  Separate volume data are not available for Africa and the Middle East, although estimates for these
regions have been made in order to calculate a world total.
The variation among regional export growth rates in 1999 was smaller than for imports.
Despite sharply lower intra-regional trade, Latin America recorded the highest export expansion of all
regions.  Asian export growth exceeded the global average as Japan's exports recovered and the five
Asian developing countries affected most by the 1997/98 financial crisis achieved double-digit export
growth.  North America's exports accelerated some what thanks to the dynamic performance of intra-
trade. The deceleration of West European economic activity in 1999 led to markedly lower growth ofintra-trade.  While intra-European Union exports expanded two times faster than world trade in 1998,
its growth in 1999 fell below that of world trade.  The transition economies and the Middle East both
recorded a contraction of their export volume.
Turning to developments in value terms , the Middle East reports the highest regional export
growth rate despite its reduction in export volume.  Africa's export growth was, at 8 per cent, the
second highest among all regions.  This was largely due to the sharp recovery of shipments from theregion's oil-exporting countries.  However, it should be recalled that for both Africa and the Middle
East, the 1999 rise did not fully offset the decrease recorded in the preceding year.  Latin America'sPRESS/175
Page 10
MOREexports rose by a strong 6 per cent, as the higher growth of Mexico's and some Caribbean countries'
exports more than offset the sharp declines reported for all South American countries.  A recovery ofintra-Asian trade supported by stronger regional growth and appreciating currencies led Asian exports
to regain their pre-crisis peak level.  North American exports expanded by 4 per cent in 1999,
following a small contraction in 1998.  The margin al decline in Western Europe's export value was
due to a deceleration in volume growth but above all, to a fall of nearly 4 per cent in the region's
dollar export prices.  The weaker export prices are principally due to the depreciation of the Euro vis-
à-vis  the US dollar.  The sluggishness of Western Europe's  import growth, together with the sharp
contraction of Russia's imports, contributed to a further decrease in the export value of transition
economies in 1999.
Table II.3
Growth in the value of world merchandise trade by region, 1997-99
(Billion dollars and percentage change)
Exports (f.o.b.) Imports (c.i.f.)
Value Annual percentage change Value Annual percentage change
1999 1997 1998 1999 1999 1997 1998 1999
World 5460 3.5 -1.6 3.5 5725 3.5 -0.8 4.0
North America 934 9.2 -0.7 4.0 1281 10.3 4.4 11.5
Latin America 292 10.2 -1.2 6.0 329 18.5 4.8 -4.0   Mexico 137 15.0 6.4 16.5 148 22.6 13.9 13.5
   Other Latin America 156 7.2 -6.2 -2.0 181 16.4 -0.1 -14.5
Western Europe 2349 -0.6 3.4 -0.5 2417 -0.3 5.9 0.5   European Union (15) 2176 -0.5 3.8 -0.5 2233 -0.5 6.3 1.0
      Extra-EU (15) trade 799 1.8 -0.3 -1.5 851 -0.3 6.2 2.5
Transition economies 212 4.1 -4.6 -1.5 211 6.5 -1.8 -13.0   Central/Eastern Europe 101 6.3 9.5 0.0 129 5.6 10.8 -2.0
   Russian Federation 74 -0.4 -15.9 0.0 41 6.7 -19.8 -30.5
Africa 113 1.9 -15.5 8.0 132 5.5 1.2 0.5   South Africa  a 27 6.2 -9.0 1.5 27 9.5 -9.3 -8.5
   Major fuel exporters  b 41 -0.1 -31.4 24.0 30 9.6 -0.8 5.5
Middle East 169 4.7 -22.4 22.0 152 8.1 -3.2 4.0Asia 1390 5.4 -6.1 7.5 1201 0.4 -17.8 10.5
   Japan 419 2.4 -7.8 8.0 311 -3.0 -17.2 11.0
   China 195 21.0 0.6 6.0 166 2.5 -1.5 18.0   Asia (5)  c 371 5.1 -3.5 9.5 292 -3.1 -30.9 15.5
a  Beginning 1998, figures refer to South Africa and no longer to the South African Common Customs Area.
b  Angola, Algeria, Congo, Gabon, Libyan Arab Yamahiriya and Nigeria.
c  Indonesia, the Republic of Korea,  Malaysia, Philippines and Thailand.PRESS/175
Page 11
MORE3. Commercial services trade
The global export value of commercial services recovered in 1999 after stagnating in 1998.
Preliminary data by major services categories indicate that all categories recorded positive growth.
Transportation services are estimated to have expanded less than the average growth rate of 1.5 per
cent despite the increase in fuel costs.  Travel services and the residual grouping of Other businessservices have both expanded by about 2 to 3 per cent.
The commercial services trade data by region shown in Table II.4 indicate that the most
dynamic export and import growth in 1999 was in North America and Asia.  While North America's
services import growth exceeded its export growth, thereby reducing its traditional surplus in
commercial services, Asia's imports and exports expanded at about the same rate (4-5 per cent).  The
rebound in Asian services trade is much weaker than  for Asian merchandise trade, in particular for
exports.  In contrast to the developments in North America and Asia, Western Europe's services trade
expanded less favourably in 1999 than in the preceding year.  Available data for the transition
economies point to a sharp contraction of both services exports and imports.
Table II.4
Growth in the value of world trade in commercial services by selected region, 1997-99
(Billion dollars and percentage change)
Exports Imports
Value Annual change Value Annual change
1999 1997 1998 1999 1999 1997 1998 1999
World 1340 4 0 2 1335 3 1 3
North America 284 8 2 5 219 10 6 9
  United States 252 9 2 5 182 11 8 10
Latin America 54 7 9 -2 60 13 4 -9
  Mexico 12 5 6 -3 14 19 7 9  Other Latin America 42 8 10 -2 47 12 4 -13
Western Europe 630 2 6 0 600 0 7 1
   European Union (15) 565 1 5 1 555 0 7 2Transition economies 47 0 2 -10 44 0 1 -8
Asia 267 5 -15 4 337 2 -11 5
   Japan 60 3 -9 -3 114 -5 -9 3   Hong Kong, China 35 1 -10 3 22 5 -2 -2
   China 27 19 -2 … 32 34 -4 …
   Asia (5)  a 62 7 -23 3 73 5 -25 5
a
  Indonesia, the Republic of Korea, Malaysia, Philippines and Thailand
Note :  Separate reliable data are not available for Africa and the Middle East, although estimates for these
regions have been made to calculate a world total.PRESS/175
Page 12
MORE4. Trade by region and country
The outstanding high investment and consumption growth in the United States  resulted in an
expansion of imports of goods and services of more than 10 per cent in both nominal and real terms.
Over the last two years United States import demand sustained world trade remarkably.  Excluding
shipments to the United States, the nominal value of world merchandise and services trade in 1999would have still been below its 1997 level and the volume expansion of world merchandise trade
would have been limited to 6 per cent instead of 9 per cent.  The share of the United States in world
merchandise imports rose to 18 per cent, the highest US share ever.  Strong domestic growth was also
one reason why United States merchandise exports in real terms lagged behind global trade growth.
All countries having strong trade ties with the United States benefitted from this development, and in
particular Canada, which expanded its merchandise exports to the United States over the last two
years by about 18 per cent, or twice the rate of global trade growth.
Commercial services' imports of the United States rose by 10 per cent and two times faster
than exports.  Canada's import growth of commerci al services recovered to 5.5 per cent, but remained
for the fifth year in a row behind the expansion of its services exports.  Although the expansion of
United States commercial services' imports has exceeded that of exports since 1997, the United Statessurplus in services in 1999 still amounted to US$68 billion.
In 1999, Latin America  recorded its worst annual economic performance for the last decade,
as regional output stagnated and the volume of merchandise imports decreased by 2 per cent.  At least
eight economies recorded lower output in 1999 than in the preceding year.  As in 1998, there is astriking difference in output and trade growth between Mexico and all the other Latin American
countries combined.  While Mexico's merchandise exports and imports rose over the last two years by
more than 20 per cent, other Latin American countries combined reported a fall in exports of nearly 8
per cent and in imports of nearly 15 per cent.
A large part of the divergent performance can be attributed to differences in the export
structure.  Manufactured goods account for 85 per ce nt of Mexico's exports, but only 40 per cent for
Latin America excluding Mexico.  Manufactures enjoyed more stable prices than non-fuel
commodities.  In addition, Mexico's exports are destined largely to the booming North American
market (nearly 90 per cent) while the other Latin American countries ship less than 30 per cent oftheir exports to North America.  Mercosur experienced a contraction of its intra-trade by about one
quarter, as output of its member countries declined or stagnated.
For commercial services imports, one can observe a similar divergency, as Mexico's imports
rose by 15 per cent, while those of the other Latin American countries contracted by nearly 10 per
cent over the last two years.  Only for commercial services exports, Mexico reports a stronger
decrease than the other Latin American countries in 1999.  The somewhat surprising decline reportedfor Mexico's commercial services exports is attributed to a decrease in revenues from both travel and
other business services.
The slowdown in Western Europe 's output growth to 2 per cent in 1999 contributed to a
markedly lower trade growth in volume terms.  As more than two-thirds of Western Europe's trade is
intra-regional, weak consumption growth affected both exports and imports.  As regards merchandise
trade, it is estimated that exports and imports grew in volume terms by about 3.5 per cent and thereby
less than world trade.  As the Euro and other European currencies weakened vis-à-vis  the US dollar,
the region's dollar export and import prices decreased on average by about 4 per cent, leading to a
stagnation of their trade dollar values in 1999.  Austria, France and Sweden were among the WestEuropean countries which recorded only moderate import growth, while Norway and Turkey even
experienced a contraction of their import volumes in 1999.  Spain, Portugal and Ireland, however,PRESS/175
Page 13
MOREcontinued to be the most dynamic traders in Western Europe, with imports and exports expanding
much faster than the European average.
Although output in the transition economies  recovered by about 2 per cent, growth remained
disappointingly low in the tenth year of transition.  Poland is the only country in the region in which
the output level in 1999 was above the level attained ten years ago.  The sluggishness in Western
Europe's economy together with a dramatic shrinkag e of Russian imports depressed the region's trade
in 1999.  Merchandise and commercial services trade were both shrinking in dollar value and volume
terms.  Most of the decline was concentrated in the CIS member countries.  Central and Eastern
Europe's merchandise trade slowed down sharply but  continued to show positive real growth in 1999.
Hungary continued to record the highest trade growth  among the Central/East European countries.  In
1999, its merchandise exports and imports expanded by about 9 per cent in dollar terms.  A major
contribution to this strong trade performance was made by the expansion of intra-industry trade in
office and telecom equipment and automotive products.
Africa and the Middle East  recorded one of their weakest annual GDP growth performances
in the 1990s.  The rebound in their merchandise exports was largely due to the recovery in oil prices.
Africa's merchandise exports rose by 8 per cent in 1999.  The major fuel exporters recorded an
increase of about one-quarter, which did not fully offset the decline recorded in 1998.  South Africaand other non-fuel exporting African countries recorded an increase in their export earnings of less
than 2 per cent.  African imports stagnated in dollar terms for the second year in a row, as sharp
declines in South Africa's imports were offset by increases by African developing countries.
Economic growth patterns differed widely in Asia  in 1999.  While GDP growth in the two
most populous countries in the region, China and India, was about 7 per cent, the output in Japan, the
largest economy in Asia, stagnated.  Among the five Asian countries severely affected by financial
crisis, the Republic of Korea recorded an outsta nding recovery with double digit growth, while
Indonesian output stagnated.  Asian developing countries as a group recorded an output expansion of
6 per cent, at least two times faster than any other developing region.
One of the outstanding developments of Asian trade in 1999 was the double digit trade
volume growth of the five Asian countries most affected by financial crises in 1997-98.  Their export
expansion remained very strong (11.5 per cent) and imports rebounded sharply without offsetting
fully the contraction of the preceding year.  The regional recovery and the cyclical recovery in theelectronic goods industry contributed largely to this dynamic growth.  For the Republic of Korea and
Malaysia, exports of office and telecom equipment accounted for more than 80 per cent of the overall
increase of their export value in 1999.
Japan's merchandise trade recovery was strong, taking into account its stagnating economy.
However, export and import values did not regain their pre-crisis peak levels.  Japan's commercial
services exports continued to shrink, while imports picked-up after a marked decrease in 1997-98.China's merchandise imports expanded by 18 per cent while those of Hong Kong, China decreased for
the second consecutive year.  A notable feature in Asia's trade is the steady decline of the share of
Hong Kong, China in Asia's merchandise trade.  Hong Kong, China's domestic exports and retained
imports had by 1999 fallen below their 1990 level.  This decline has to be seen in the context of the
relocation of Hong Kong, China's manufacturing in dustry to China, which in turn has greatly
enhanced its share in world exports.  In respect to commercial services, how ever, Hong Kong, China
maintains its position as the leading developing country exporter.  For the Asian region, exports of
commercial services decreased more strongly in 1998 and recovered by far less in 1999 than did
merchandise exports.  For imports of commercial services, the recovery in 1999 was also far smaller
than for merchandise trade.
Looking at trade performance by country , the following features emerge for 1999 trade
developments (see Appendix Tables).  First, the United States consolidated its leading position inPRESS/175
Page 14
MOREworld merchandise imports and world commercial services exports.  Its share in world merchandise
imports reached, at 18 per cent, its highest level ever.  Second, oil-exporting countries recorded ingeneral the highest export growth in 1999 (at least 16 of them recorded export increases ranging from
15 per cent to 50 per cent).  For most of them the increase in 1999 did not fully offset the declines
recorded in the preceding year.  Third, exporters of office and telecom equipment benefitted from the
recovery in the global electronic goods industry.  The double digit export growth of the Republic of
Korea, Malaysia, the Philippines, Costa Rica and Israel was largely due to office and telecomequipment exports.  Fourth, a large number (at least 24) of South American and transition economies
recorded double-digit decreases in their imports and often also a fall in their export values.  The main
causes of these bleak developments include the steep fall of intra-regional trade and the low prices of
non-fuel commodities.  Fifth, the four largest traders in Western Europe (France, Germany, Italy and
the United Kingdom) all recorded a small decline in their merchandise export values and minimal
changes in their imports.
5. Processing trade contributes to exceptional trade expansion in selected developing
countries
Over the last fifteen years, the outstanding high trade growth recorded by a selected number
of developing countries can be partly attributed to the expansion of their "processing trade".  Besidemultilateral and regional trade liberalization, an increasing number of countries have modified their
import regime by granting, under certain conditions, duty-free access to those imports which are
bound for the processing and assembling of goods destined for exports.  This preferential tariff
treatment was initially limited to trade which went through specific areas (e.g. the Special Economic
Zones in China or the maquiladoras zones in Mexico) but often extended thereafter to companieslocated outside these specifically designated areas.  While the number of export processing zones has
risen to about 850, their success in expanding employment and trade is mixed.
8 In several countries
employment in these zones rose sharply and trade was growing rapidly while in many other countries
the creation of special zones granting tariff preferences to processing trade had a negligible impact on
both trade and employment.  In the 1990's the most dynamic processing traders among the developingcountries are to be found in Asia and Latin America.
A comprehensive appreciation of the contribution of "processing trade" to the expansion of
developing countries' merchandise exports and imports is not attempted here, as the data on
processing trade are not as readily available as standard trade statistics.  However, the examples givenbelow show that the "processing trade" has gained in importance and often played a crucial part in
these countries' overall trade performance.  All the eight countries presented in Chart II.4 have
recorded an expansion of exports well ahead of the global average in the last decade.  Five of them
recorded average annual export growth rates around 15 per cent, which is about three times faster than
the global trade expansion of 5.5 per cent.
                                                     
8 International Labour Organization, "Labour and social issues relating to export processing zones",
Geneva 1998.PRESS/175
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MOREPreferential tariff treatment to "processing trade" is not only a feature of trade regimes in the
developing countries.  Industrial countries too are often providing duty exemption or reduction on
imported goods if these products have been manufactured abroad with materials/components from the
importing country.  While the value of these imports can be relatively important in bilateral trade
flows, their share in total imports is at present rather moderate.  For the United States and the
European Union the share of imports benefitting from this specific duty exemption amounted to 8 per
cent in the US  and to 2 per cent in the EU (excluding intra-trade) in 1998.9  In the United States the
share of processing trade in total imports declined markedly as trade with Mexico and Canada becameincreasingly tariff free with the implementation of NAFTA.
                                                     
9 United States International Trade Commission, "Production sharing:  Use of United States
components and materials in foreign assembly operations.  (US imports under production sharing provisions ofHarmonized Tariff Schedule Heading 9802)", Decem ber 1999 and EUROSTAT, Intra and Extra-EU trade,
supplement 12, 1999 (CD-ROM).0102030405060708090
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999China
MoroccoTunisia
MexicoDominican Republic
El Salvador
Philippines
Bangladesha
a Refers to fiscal years. Includes only shipments from two export processing zones.
Source : National statistics.Chart II.4 Share of processing trade in total merchandise 
exports of selected  countri es, 1990-99
(Percentage)PRESS/175
Page 16
MORETable II-5
Processing trade and export performance of selected countries, 1990-99
(Billion dollars and percentage)
Total export Share of Value of
growth processing trade processing exports
Country 1990-1999 1998 1998
(percent) (percent) (billion $)
Dominican Republic  a n.a. 82.2 4.1Tunisia 5.9 67.4 4.0China 13.5 56.9 104.6
El Salvador
   b 16.8 48.6 1.2
Philippines 16.5 40.9 12.1Mexico 14.4 45.2 53.1
Morocco 6.4 34.7 2.6
Bangladesh  c 15.2 13.4 0.7Memorandum item:
World total 5.4 … …
a  Between 1993 and 1998 exports grew by 9.2% and world exports by 7.7% annually.
b  Refers to years 1991-1999.
c  Refers to fiscal years.
Source : National Statistics
6. Outlook
Global economic output is expected to accelerate from 3 per cent in 1999 to about 3.5 per
cent in 2000.  The volume of world merchandise trade growth should reach 6.5 per cent.  Higher trade
growth is possible, in particular, if the demand in Western Europe and Japan pick up more strongly
than currently projected.
In 2000, GDP growth of industrial countries could expand by 3 per cent or one half per cent
faster than in 1999 as moderately lower growth in the United States is more than offset by higher
growth in Western Europe and Japan.  Latin America and the Middle East should see a strong pick-up
in their GDP growth after experiencing a stagna tion of output in 1999.  Higher growth is also
projected for the transition and African economies.  GDP growth of the Asian developing countries is
projected to remain unchanged as the impact of the expansionary fiscal policies and the rebuilding ofinventories will be less important in 2000 than in 1999, but offset by a strengthening of fixed
investment and private consumption.
More robust growth of the world economy in 2000, together with the carry-over effect due to
the trade acceleration in the second half of 1999 is projected to lead to export volume growth of atleast 6.5 per cent.  Most of this higher growth is expected to come from Western Europe and to a
lesser extent from Latin America, the Middle East and the transition economies.  North America and
the developing countries in Asia, which recorded double digit import growth in 1999, are likely to
expand their imports less rapidly in 2000, and the projected deceleration of North America's final
demand should lead to less dynamic import growth in 2000.PRESS/175
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MOREThe projections above assume that the oil price will recede from its US$30 per barrel level in
the first quarter back to a range of US$20 to US$25 and that major financial market turbulence - in
particular a sudden sharp correction of stock markets and the dollar rate - can be avoided in the
remaining months of the year.  A sharp correction of the stock markets, together with a marked
slowing down of United States demand and imports, could alter the trade forecast significantly.  Note,
for example, that at nearly 350 billion dollars, the United States merchandise trade deficit in 1999exceeded the total imports of Japan.  A disruptive adjustment of the current external imbalances
would imply a major risk to trade growth in the near future.PRESS/175
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MOREAppendix Table 1
Leading exporters and importers in world merchandise trade, 1999
(Billion dollars and percentage)
Annual Annual
percentage percentage
Exporters Value Share change Importers Value Share change
1998 1999 1998 1999
United States 695.0 12.4 -1 2 United States 1059.9 18.0 5 12
Germany 540.5 9.6 6 0 Germany 472.6 8.0 6 0Japan 419.4 7.5 -8 8 United Kingdom 320.7 5.5 2 2France 299.0 5.3 5 -2 Japan 310.7 5.3 -17 11United Kingdom 268.4 4.8 -3 -2 France 286.1 4.9 7 -1Canada 238.4 4.2 0 11 Canada 220.2 3.7 3 7Italy 230.8 4.1 1 -5 Italy 216.0 3.7 3 0Netherlands 204.1 3.6 4 2 Netherlands 188.9 3.2 5 1China 194.9 3.5 1 6 Hong Kong, China 181.7 3.1 -12 -3Belgium-Luxembourg 184.1 3.3 6 3          retained imports  a 29.2 0.5 -30 -20
Belgium-Luxembourg 169.4 2.9 7 2
Hong Kong, China 174.8 3.1 -7 0 China 165.7 2.8 -1 18
     domestic exports 22.2 0.4 -10 -10 Mexico 148.2 2.5 14 13Korea, Rep. of 144.2 2.6 -3 9 Spain 145.0 2.5 8 9Mexico 136.7 2.4 6 16 Korea, Rep. of 119.7 2.0 -35 28Taipei, Chinese 121.6 2.2 -9 10 Taipei, Chinese 111.0 1.9 -8 6Singapore 114.6 2.0 -12 4 Singapore 111.0 1.9 -23 9     domestic exports 68.6 1.2 -13 8          retained imports  a 65.0 1.1 -31 18Spain 109.4 2.0 5 0 Switzerland 80.1 1.4 5 0Malaysia 84.5 1.5 -7 15 Australia 69.0 1.2 -2 7Sweden 84.5 1.5 2 0 Sweden 68.2 1.2 4 0Switzerland 80.6 1.4 4 2 Austria 67.8 1.2 5 0Russian Fed.  b 74.3 1.3 -16 0
Ireland 69.6 1.2 20 8 Malaysia 65.5 1.1 -26 12
Austria 62.0 1.1 7 -1 Brazil 51.8 0.9 -7 -15Thailand 58.4 1.0 -5 7 Thailand 50.6 0.9 -32 18Australia 56.1 1.0 -11 0 Ireland 45.6 0.8 14 2Saudi Arabia 50.5 0.9 -35 27 Poland 44.8 0.8 11 -5Indonesia 48.5 0.9 -9 -1 India 44.6 0.8 3 4Brazil 48.0 0.9 -4 -6 Denmark 43.3 0.7 4 -6Denmark 47.8 0.9 -1 -1 Russian Fed.  b 41.1 0.7 -20 -30Norway 44.9 0.8 -18 13 Turkey 39.2 0.7 -5 -15Finland 41.5 0.7 6 -4 Portugal 37.6 0.6 5 2
Total of above  c 4927.0 87.8 - - Total of above  c 4976.0 84.7 - -
World  c 5610.0 100.0 -2 3 World  c 5875.0 100.0 -1 4
a  Retained imports are defined as imports less re-exports.
b  Includes trade with the Baltic States and the CIS.c  Includes significant re-exports or imports for re-export.PRESS/175
Page 19
MOREAppendix Table 2
Leading exporters and importers in world merchandise trade (excluding intra-EU trade), 1999
(Billion dollars and percentage)
Annual Annual
percentage percentage
Exporters Value Share change Importers Value Share change
1998 1999 1998 1999
European Union(15) 798.6 18.9 0 -1 United States 1059.9 23.6 5 12
United States 695.0 16.4 -1 2 European Union (15) 851.2 18.9 6 3Japan 419.4 9.9 -8 8 Japan 310.7 6.9 -17 11Canada 238.4 5.6 0 11 Canada 220.2 4.9 3 7China 194.9 4.6 1 6 Hong Kong, China 181.7 4.0 -12 -3Hong Kong, China 174.8 4.1 -7 0          retained imports  a 29.2 0.6 -30 -20     domestic exports 22.2 0.5 -10 -10 China 165.7 3.7 -1 18Korea, Rep. of 144.2 3.4 -3 9 Mexico 148.2 3.3 14 13Mexico 136.7 3.2 6 16 Korea, Rep. of 119.7 2.7 -35 28Taipei, Chinese 121.6 2.9 -9 10 Taipei, Chinese 111.0 2.5 -8 6Singapore 114.6 2.7 -12 4 Singapore 111.0 2.5 -23 9     domestic exports 68.6 1.6 -13 8          retained imports a 65.0 1.4 -31 18
Malaysia 84.5 2.0 -7 15 Switzerland 80.1 1.8 5 0
Switzerland 80.6 1.9 4 2 Australia 69.0 1.5 -2 7Russian Fed. b 74.3 1.8 -16 0 Malaysia 65.5 1.5 -35 12Thailand 58.4 1.4 -5 7 Brazil 51.8 1.2 -7 -15Australia 56.1 1.3 -11 0 Thailand 50.6 1.1 -32 18Saudi Arabia 50.5 1.2 -35 27 Poland 44.8 1.0 11 -5Indonesia 48.5 1.1 -9 -1 India 44.6 1.0 3 4Brazil 48.0 1.1 -4 -6 Russian Fed. b 41.1 0.9 -20 -30Norway 44.9 1.1 -18 13 Turkey 39.2 0.9 -5 -15India 36.5 0.9 -4 9 Norway 33.8 0.8 1 -7
Philippines 35.0 0.8 18 19 Israel 33.2 0.7 -5 13
United Arab Emirates 29.5 0.7 -13 15 Philippines 32.6 0.7 -18 4Czech Rep. 26.8 0.6 16 2 Saudi Arabia 30.0 0.7 4 0Poland 26.8 0.6 10 -5 United Arab Emirates 28.9 0.6 -9 6South Africa   c 26.7 0.6 -9 1 Czech Rep. d 28.9 0.6 6 0Turkey 26.2 0.6 3 -3 Hungary 27.7 0.6 21 8Israel 25.3 0.6 2 10 South Africa   c 26.8 0.6 -9 -8Hungary 24.6 0.6 20 7 Argentina 25.5 0.6 3 -19Argentina 23.3 0.6 0 -12 Indonesia 23.9 0.5 -34 -13Venezuela 18.9 0.4 -21 10 Egypt 16.2 0.4 22 0
Total of above  e 3884.0 91.8 - - Total of above  e 4073.0 90.7 - -
World (excl. intra-EU trade)  e 4232.0 100.0 -4 4 World (excl. intra-EU trade)  e 4494.0 100.0 -3 5
a  Retained imports are defined as imports less re-exports.
b  Includes trade with the Baltic States and the CIS.c Beginning 1998, figures refer to South Africa and no longer to the South African Common Customs Area.d  Imports are valued f.o.b.e  Includes significant re-exports or imports for re-export.PRESS/175
Page 20
ENDAppendix Table 3
Leading exporters and importers in world trade in commercial services, 1999
(Billion dollars and percentage)
Annual Annual
percentage percentage
Exporters Value Share change Importers Value Share change
1998 1999 1998 1999
United States 251.7 18.8 2 5 United States 182.3 13.7 8 10
United Kingdom 101.4 7.6 7 2 Germany 127.2 9.5 3 2France 79.3 5.9 5 -6 Japan 113.9 8.5 -9 3Germany 76.8 5.7 3 -3 United Kingdom 81.4 6.1 11 4Italy 64.5 4.8 0 -3 Italy 62.7 4.7 7 0Japan 59.8 4.5 -9 -3 France 59.2 4.4 5 -9Spain 54.1 4.0 12 11 Netherlands 46.5 3.5 4 0Netherlands 53.1 4.0 3 3 Canada 37.1 2.8 -4 5Belgium-Luxembourg 37.6 2.8 6 4 Belgium-Luxembourg 35.5 2.6 8 4Hong Kong, China 35.4 2.6 -10 3 China 32.1 2.4 -4 …
Austria 32.6 2.4 9 3 Spain 30.9 2.3 13 12
Canada 32.4 2.4 2 7 Austria 29.5 2.2 6 -2Switzerland 27.2 2.0 5 5 Korea, Rep. of 26.7 2.0 -19 14China 26.6 2.0 -2 … Ireland 23.5 1.8 32 18Korea, Rep. of 25.0 1.9 -6 5 Taipei, Chinese 23.2 1.7 -4 0Singapore 22.9 1.7 -40 25 Sweden 22.8 1.7 11 5Sweden 18.0 1.3 1 2 Hong Kong, China 22.4 1.7 -2 -2Australia 17.2 1.3 -13 9 Singapore 19.3 1.4 -7 8Denmark 16.0 1.2 6 8 Australia 18.0 1.3 -8 6Turkey 16.0 1.2 21 -31 India 17.3 1.3 16 22
Taipei, Chinese 14.8 1.1 -2 -11 Denmark 16.2 1.2 13 5
Thailand 14.1 1.1 -16 8 Switzerland 15.7 1.2 8 3Norway 13.7 1.0 -3 -2 Norway 15.4 1.2 4 2India 13.2 1.0 24 19 Thailand 13.9 1.0 -31 17Mexico 11.6 0.9 6 -3 Mexico 13.7 1.0 7 9Malaysia 10.8 0.8 -24 … Malaysia 13.0 1.0 -24 …Greece 10.5 0.8 6 … Indonesia 12.7 0.9 -28 8Israel 10.3 0.8 8 14 Russian Fed. 11.7 0.9 -14 -27Poland 9.8 0.7 21 -10 Brazil 11.6 0.9 9 -26Russian Fed. 9.7 0.7 -9 -25 Israel 10.7 0.8 5 12
Total of above 1165.0 87.1 - - Total of above 1145.0 85.9 - -
World 1340.0 100.0 0.0 1.5 World 1335.0 100.0 0.5 2.5