Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: Global Recession Triggers Slump in World Trade Volumes
January 28, 2009
- Financial markets remain under stress, pulling down real economy
- Global output and trade fall sharply in final months of 2008
- IMF revises trade and oil projections down
Global output and trade plummeted in the final months of 2008, and the IMF said it expects world trade volumes to contract this year, falling by 2.8 percent.
Cargo containers in Newark, New Jersey: global trade is falling at a fast pace because of the crisis (photo: Spencer Platt/Getty Images)
World Economic Crisis
The continuation of the financial crisis, with government policies failing to dispel uncertainly, has caused asset values to fall sharply across advanced and emerging economies, decreasing household wealth and thereby putting downward pressure on consumer demand, the IMF said in its updated World Economic Outlook, released on January 28 (see chart).
In addition, the associated high level of uncertainty has prompted households and businesses to postpone expenditures, reducing demand for consumer and capital goods. At the same time, widespread disruptions in credit are constraining household spending and curtailing production and trade.
As a result, in its latest forecast for world economic growth, the IMF has sharply revised its trade projections downward. Global trade (in volume terms) is expected to fall by 2.8 percent in 2009, representing a 4.8 percentage point drop relative to the IMF's November projections (see table).
In the advanced economies, the IMF projects imports to fall by 3.1 percent in 2009. In emerging and developing economies, imports are expected to fall by 2.2 percent. Similarly, the IMF now projects advanced economies' exports to contract by 3.7 percent. In emerging and developing economies, exports are expected to drop by 0.8 percent.
And commodity prices continue to tumble. The IMF's oil price projection has been revised down to $50 a barrel for 2008 and $60 a barrel for 2009 (from $68 and $78, respectively, in the November 2008 WEO Update). Metals and food prices have also been marked down in line with recent developments.
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