IMPERIAL INSTITUTE OF HIGHER EDUCATION
Abstract As the recession takes its full effect, countries face a lot of issues because of the inability to cover their balance of payment. This has been a global catastrophe and has become a barrier towards globalization. Document contains a detailed analysis of the research conducted to identify the real impact to world as well as regional trade. Moreover in addition to analysing region wise trades, exports and imports of most important countries in those particular regions were also analysed in detail. It was revealed that in 2009, world merchandise trade have gone down by 23% and the commercial services by 13% when compared to the previous year. This drop has reduced the world merchandise trade to 12147 billion dollars and commercial services to 3310 billion dollars respectively. The seven regions namely, North America, South and Central America, Europe, Commonwealth of Independent States, Africa, Middle East and Asia are also affected due to the last year recession in different parameter of their nature. The reduction of commodities and commercial services of export and imports can be seen throughout the entire world despite of the countries’ wealth or the scale. This document also discusses the causes for this dip in world trade and how it can impact the future. This paper goes to show that in the future, most countries are to adopt socioeconomic policies, and highlights that new markets will emerge specially from the Asian region where they are already adopting Socio-economic policies. It fairly visible that post recession also had a greater impact on international trade in areas like restructuring markets policies, climate change, food, energy and many more. It also discusses how the current policy trends need to adjust from the concepts of liberalization, privatization and globalization.
Keywords: International Trade, Exports, Imports, Recession, Regional Impacts.
PPEC 140
Master of Business Administration (MBA)
Page | 5
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Table of Content
Abstract ............................................................................................................................... 5 Table of Content................................................................................................................. 6 List of Figures ..................................................................................................................... 6 List of Tables ...................................................................................................................... 9 Introduction ...................................................................................................................... 10 Chapter 1 Overview on International Trade and Recession ....................................... 11 1.1 Overview of International Trade ............................................................................ 11 1.2 Overview of Recession .......................................................................................... 12 1.3 History of Recessions ............................................................................................ 14 1.4 Recession 2008 - 2009 ........................................................................................... 15 Chapter 2 Impact on International Trade across the World ....................................... 21 2.1 Impact on Entire World .......................................................................................... 24 2.2 Impact on African Region ....................................................................................... 28 2.3 Impact on South and Central American Region ..................................................... 35 2.4 Impact on North American Region ......................................................................... 38 2.5 Impact on Asia Pacific Region ............................................................................... 41 2.6 Impact on Middle East ............................................................................................ 46 2.7 Impact on Commonwealth of Independent States Region ...................................... 49 2.8 Summary on International Trade Figures ............................................................... 52 Chapter 3 Highlights of the Recession on International Trade ................................... 53 Conclusion ........................................................................................................................ 62 Reference .......................................................................................................................... 63 Appendices ........................................................................................................................ 66 Appendix A .................................................................................................................... 66 Appendix B .................................................................................................................... 67 Appendix C .................................................................................................................... 68 Appendix D .................................................................................................................... 69
PPEC 140
Master of Business Administration (MBA)
Page | 6
IMPERIAL INSTITUTE OF HIGHER EDUCATION
List of Figures Figure 1-1: Factors Affecting International Trade ............................................................. 11 Figure 1-2: The Downward Spiral of an Economy............................................................ 13 Figure 1-3: Comparison of Recessions .............................................................................. 14 Figure 1-4: Subprime Mortgage Crisis .............................................................................. 15 Figure 1-5: How Securitisation Works .............................................................................. 17 Figure 1-6: Fall of Bear Stearns Share Prices .................................................................... 18 Figure 2-1: Key Components in International Trade ......................................................... 22 Figure 2-2: Total Percentage of Merchandise and Commercial Services.......................... 22 Figure 2-3: International Trade World Market Share ........................................................ 23 Figure 2-4: Dual Impact on International Trade ................................................................ 23 Figure 2-5: Volume of World Merchandise Exports, 1965-2009 ...................................... 24 Figure 2-6: Volume Growth in World Merchandise Exports Trade by Region ................ 25 Figure 2-8: World Exports Growth of Merchandise and Commercial Services ................ 26 Figure 2-7: Ratio of World Exports of Goods And Commercial Services to GDP ........... 26 Figure 2-9: World Exports Growth of Commercial Services by Major Categories .......... 26 Figure 2-11: Worlds Merchandise Trade Growth by Value .............................................. 27 Figure 2-10: Worlds Merchandise Trade Growth by Volume ........................................... 27 Figure 2-12: Worlds Commercial Services Growth by Value ........................................... 27 Figure 2-13: Price Indices of Major Commodity Groups - Africa, 2007-2009 ................. 28 Figure 2-14: African Region Merchandise Trade Growth by Volume .............................. 29 Figure 2-15: African Region Merchandise Trade Growth by Value ................................. 29 Figure 2-16: African Region Commercial Services Growth by Value .............................. 29 Figure 2-17: South Africa Export Trade by Products – Growth Rate ............................... 30 Figure 2-18: South Africa Import Trade by Products – Growth Rate ............................... 30 Figure 2-20: European Region Merchandise Trade Growth by Value ............................. 32 Figure 2-19: European Region Merchandise Trade Growth by Volume ........................... 32 Figure 2-21: European Region Commercial Services Growth by Value ........................... 32 Figure 2-22: United Kingdom Export by Products – Growth Rate ................................... 33 Figure 2-23: United Kingdom Imports by Products – Growth Rate .................................. 33 Figure 2-24: Germany Export by Products – Growth Rate ............................................... 34 Figure 2-25: Germany Imports by Products – Growth Rate .............................................. 34 Figure 2-26: Commodity Price Index, 2008-2009 ............................................................. 35 Figure 2-27: South and Central American Region Merchandise Trade Growth ............... 36 Figure 2-28: South and Central American Region Merchandise Trade Growth ............... 36
PPEC 140
Master of Business Administration (MBA)
Page | 7
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Figure 2-29: South and Central American Region Commercial Services Growth ............ 36 Figure 2-30: Brazil Export by Products – Growth Rate .................................................... 37 Figure 2-31: Brazil Imports by Products – Growth Rate ................................................... 37 Figure 2-33: North American Region Merchandise Trade Growth by Value ................... 39 Figure 2-32: North American Region Merchandise Trade Growth by Volume ................ 39 Figure 2-34: North American Region Commercial Services Growth by Value ................ 39 Figure 2-35: United States Exports by Products – Growth Rate ....................................... 40 Figure 2-36: United States Imports by Products – Growth Rate ....................................... 40 Figure 2-37: Asia Pacific Region Merchandise Trade Growth by Volume....................... 42 Figure 2-38: Asia Pacific Region Merchandise Trade Growth by Value ......................... 42 Figure 2-39: Asia Pacific Region Commercial Services Growth by Value....................... 42 Figure 2-40: China Export by Products – Growth Rate..................................................... 43 Figure 2-41: China Import by Products – Growth Rate..................................................... 43 Figure 2-42: Japan Export by Products – Growth Rate ..................................................... 44 Figure 2-43: Japan Import by Products – Growth Rate ..................................................... 44 Figure 2-44: Sri Lanka Export by Products – Growth Rate............................................... 45 Figure 2-45: Sri Lanka Imports by Products – Growth Rate ............................................. 45 Figure 2-46: Middle East Region Merchandise Trade Growth by Volume...................... 47 Figure 2-47: Middle East Region Merchandise Trade Growth by Value .......................... 47 Figure 2-48: Middle East Region Commercial Services Growth by Value...................... 47 Figure 2-49: Saudi Arabia Export by Products – Growth Rate ......................................... 48 Figure 2-50: Saudi Arabia Imports by Products – Growth Rate........................................ 48 Figure 2-51: CIS Region Merchandise Trade Growth by Volume .................................... 50 Figure 2-52: CIS Region Merchandise Trade Growth by Value ....................................... 50 Figure 2-53: CIS Region Commercial Services Growth by Value .................................... 50 Figure 2-54: Russia Export by Products – Growth Rate.................................................... 51 Figure 2-55: Russia Imports by Products – Growth Rate .................................................. 51 Figure 3-1: Monthly Unemployment Rates ....................................................................... 53 Figure 3-2: Price of Oil (2003-2008) ................................................................................. 56 Figure 3-3: Wind Energy ................................................................................................... 57 Figure 3-4: Maldives' Cabinet Meeting Held Under Water ............................................... 58
PPEC 140
Master of Business Administration (MBA)
Page | 8
IMPERIAL INSTITUTE OF HIGHER EDUCATION
List of Tables Table 1-1: Comparison of Leveraging and Non Leveraging ............................................. 18 Table 2-1: Top Trading Nations ........................................................................................ 21 Table 2-2: Quarterly Growth in World Trade in Manufactures by Product ...................... 25 Table 2-3: African Region - Country based Trade Growth ............................................... 28 Table 2-4: European Region - Country based Trade Growth ............................................ 31 Table 2-5: South and Central American Region - Country based Trade Growth .............. 35 Table 2-6: North American Region - Country based Trade Growth ................................. 38 Table 2-7: Asian Region - Country based Trade Growth .................................................. 41 Table 2-8: Middle East Region - Country based Trade Growth ........................................ 46 Table 2-9: CIS Region - Country based Trade Growth ..................................................... 49
PPEC 140
Master of Business Administration (MBA)
Page | 9
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Introduction Assignment Objectives Understand what International Trade is. Evaluate the Trade on Recession period around the world. Present the Fact and Figures to demonstrate the impact that has been occurred during the recession. Analyse the Long Term Impact and Aftermath related to international trade.
Context of the Assignment This report intends to identify and analyse the impact of recession on international trade. Discussion mainly focuses on 2008-2009 recession period which was the first recession in 21st century. There are three main chapters; firstly, a brief overview on international trade, and recession then the impacts are presented using trade figures and finally the long term impacts and aftermath of the recession. It broke out from the biggest economies and later spread all over the world. As this occurred in an era where technology and media were highly developed, there are lot of statistics available on the web that can be use to show the impact. Due to that reason, authors have demonstrated the impact by taking sample trade figures from different regions and countries where it plays an important role than others in some way. Methodology The data has been collected mainly through International Statistical Trade Databases. Other than that Web Sites, Published Journals, Business Reports, Government Publications and Other documents available on the internet are also used to evaluate the situation. As this topic is current, most of the statistics and relevant information is available on web sites and Statistical databases. Again, there are some negligible value differences in each statistical database depending on their methods of evaluating. Finally, gathered data were analysed using both quantitative and qualitative methods.
PPEC 140
Master of Business Administration (MBA)
Page | 10
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Chapter 1 Overview on International Trade and Recession
1.1 Overview of International Trade It is the economic transactions that are made between countries. Among the items commonly traded are consumer goods, such as television sets and clothing; capital goods, such as machinery; and raw materials and food. Other transactions involve services, such as travel services and payments for foreign patents. International trade transactions are facilitated by international financial payments, in which the private banking system and the central banks of the trading nations play important roles. “…International trade and the accompanying financial transactions are generally conducted for the purpose of providing a nation with commodities it lacks in exchange for those that it produces in abundance; such transactions, functioning with other economic policies, tend to improve a nation’s standard of living. Much of the modern history of international relations concerns efforts to promote freer trade among nations…”
(Encyclopædia Britannica, 2010) International Laws
Retail Pricing
Outsourcing Labour
Currency Exchange
Insurance
International Trade
Legal Documents Transport Costs
Globalization
Tariffs
Imports
Customs
Costs Of Goods
Figure 1-1: Factors Affecting International Trade (Source: Research Data)
PPEC 140
Master of Business Administration (MBA)
Page | 11
IMPERIAL INSTITUTE OF HIGHER EDUCATION
1.2 Overview of Recession In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise. A recession by definition is a business cycle contraction, which generally slows down economic activity of the whole world. One could see a lot of macroeconomic factors change in a similar way during this period. Some of these factors are gross domestic product, employment, investment spending, capacity utilization, household incomes, business profits and inflation where all these show the signs of fall during this period. Similarly bankruptcies and unemployment rises. The cause for the recession believed to be the widespread drop in expenditure. Most of the governments adopt expansionary macroeconomic policies such as increasing government spending, increasing money supply, and decreasing taxations to counter recessionary activities. But as per (Recession, 2010) many experts and economists are under the impression that an economic recession could be confirmed if only the GDP growth is negative for a period of two or more than two quarters. Davis (2009) Suggests that both the definitions are correct since both of them generate similar results such as loss of jobs, decline in real income, slow down in industrial production, and a slump in consumer spending with reductions in national production of goods and services. (Davis, 2009)
PPEC 140
Master of Business Administration (MBA)
Page | 12
IMPERIAL INSTITUTE OF HIGHER EDUCATION
According to him big businesses are the hardest hit. As sales decrease, large companies stop hiring employees or freeze recruitments in full. In an effort to cut back costs, they stop new developments, marketing campaigns and promotions etc. “…Expenditures for marketing and advertising may also be reduced. These costcutting efforts will impact other businesses, both big and small, which provide the goods and services used by the big manufacturer, which in turn creates a chain effect affecting all parties in the supply chain negatively…”
(Davis, 2009)
Figure 1-2: The Downward Spiral of an Economy [Source: (MyBIGinfo, 2009)]
PPEC 140
Master of Business Administration (MBA)
Page | 13
IMPERIAL INSTITUTE OF HIGHER EDUCATION
1.3 History of Recessions The world has faced several recessions in the past prior to the 2008 – 2009 crisis. As per the International Monitory Fund, in deciding when a particular country is in recession, economists often use statistical procedures to date the peaks and troughs of a key indicator of economic activity, such as the country’s real GDP. The world global real per capita GDP has contracted four times since the World War 2. (Kose et al., 2009)
“...The global recession of 1975 followed a sharp increase in oil prices, which shot up fourfold in a short time following the Arab oil embargo that began in 1973. This recession marked the beginning of a prolonged period of stagflation, with low
output
growth
and
high
inflation in the United States...” (Kose et al., 2009) “...The
recession
in
1982
was
associated with a variety of events, including tight monetary policies in several advanced economies, the rapid increase in oil prices, and the debt crisis experienced by a number of Latin American countries...” (Kose et al., 2009) “...The 1991 recession reflected a Figure 1-3: Comparison of Recessions [Source: (Kose et al., 2009)]
host of problems in various corners of the world: difficulties in the U.S.
saving and loan industry, banking crises in several Scandinavian economies, adverse effects of an exchange rate crisis on a large number of European countries, challenges
PPEC 140
Master of Business Administration (MBA)
Page | 14
IMPERIAL INSTITUTE OF HIGHER EDUCATION
faced by the east European transition economies, and the uncertainty stemming from the Gulf War and the subsequent increase in the price of oil...�
(Kose et al., 2009)
The latest recession was caused due to some unique financial complications in the USA which was gone out of hand of the government.
1.4 Recession 2008 - 2009 Rodrigo, (2010) argues that the latest recession to hit the world was due to four major factors out of which USA is responsible. (Rodrigo, 2010)
1. Subprime Home Loans 2. Securitisation 3. Leverage 4. Globalisation
1.4.1 Subprime
Figure 1-4: Subprime Mortgage Crisis [Source: (wikipedia, 2010) ]
PPEC 140
Master of Business Administration (MBA)
Page | 15
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Subprime are the population who has weak histories in financial aspects which is rated as per a score by the USA government and banking systems. Subprime posses a score rating 50% to 65%. 15% of the population in the USA belongs to the subprime category. The percentage of total loans granted by banks were 6% to subprime when the loans started defaulting and the house prices started to plummet for the first time in 20 years due to the fact that the supply of houses had increased much more than the demand.
As a result of this phenomenon, the prices came down to levels less than the amounts paid by prime customers which ended up in defaulting the loans by them deliberately. Banks were severely affected to the extent of being bankrupt which some of them eventually did. (Rodrigo, 2010)
In 2007 March, it was recorded that USA subprime mortgages estimated valued at $1.3 trillion. Subprime mortgages were $600 billion in 2006. (msnbc, 2007)
1.4.2 Securitisation “…Securitization takes the role of the lender and breaks it into separate components. Unlike the more traditional relationship between a borrower and a lender, securitization involves the sale of the loan by the lender to a new owner--the issuer-who then sells securities to investors. The investors are buying "bonds" that entitle them to a share of the cash paid by the borrowers on their mortgages. Once the lender has sold the mortgage to the issuer, the lender no longer has the power to restructure the loan or make other accommodations for its borrower. That becomes the responsibility of a servicer, who collects the mortgage payments, distributes them to the issuer for Payment to investors, and, if the borrower cannot pay, takes action to recover cash for the investors. The servicer can only do what the securitization documents allow it to do…”
(Bair, 2007)
Due to the highly intricate and complex securitisation insurance corporations were protecting assets multiple times. This was a result of the high level of commission based business criteria. (Rodrigo, 2010) PPEC 140
Master of Business Administration (MBA)
Page | 16
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Figure 1-5: How Securitisation Works [Source: (Bair, 2007)]
1.4.3 Leverage “…Financial leverage takes the form of a loan or other borrowings, the proceeds of which are (re)invested with the intent to earn a greater rate of return than the cost of interest. If the firm's rate of return on assets is higher than the rate of interest on the loan, then its return on equity will be higher than if it did not borrow because assets = equity + debt. On the other hand, if the firm's ROA is lower than the interest rate, then its ROE will be lower than if it did not borrow…”
(Wikipedia, 2010)
“…Leverage allows greater potential returns to the investor that otherwise would have been unavailable but the potential for loss is also greater because if the investment becomes worthless, the loan principal and all accrued interest on the loan still need to be repaid…”
PPEC 140
(Wikipedia, 2010)
Master of Business Administration (MBA)
Page | 17
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Leverage was one of the primary reasons for Wall Street giants such as Bear Stearns to fall to its knees ultimately to be bought over by smaller rival companies; in this case it was JP Morgan.
Figure 1-6: Fall of Bear Stearns Share Prices [Source: (Burns, 2008)]
Table 1-1: Comparison of Leveraging and Non Leveraging [Source: (TheFreeDictionary, 2009)]
PPEC 140
Master of Business Administration (MBA)
Page | 18
IMPERIAL INSTITUTE OF HIGHER EDUCATION
1.4.4 Globalisation
“…The debate over globalization has been lively and passionate over the past years, and it has been associated with high emotions and sometimes with violent conflicts. However “Globalisation” remains a vague term under which the ongoing trend towards a deeply integrated world economy with all its economic, technological, political, and cultural dimensions have been subsumed…”
(Wagner, 2005)
“…Real globalization in the sense of an increase in international trade or “openness” affects inflation, as has been discussed in recent years. The recent literature has identified openness as one of the countervailing forces that lessen the incentive to inflate. The argument which is originally due to Romer (1993) is that, the more open the economy, the smaller the real benefits of higher output from surprise monetary expansion, and thus the lower the equilibrium rate of inflation. As domestic output increases, the terms of trade worsen: the more open the economy, the larger the fraction of foreign goods in domestic consumption, and the greater the welfare loss from the terms of trade loss. In short, more open economies may be blessed with a lower incentive to inflate…”
(Wagner, 2005)
“…But the negative effects of the current international financial crisis have revealed the complexity of an international arena where all the actors of globalization have grown interdependent with one another. This is clearly shown by the fact that those countries dependent on their trade exports have been the ones suffering the most in this global recession, as opposed to those who do not rely too much on their export capability and since the US is practically everyone’s biggest trade partner, when it caught the colds, everyone started to sneeze…”
PPEC 140
Master of Business Administration (MBA)
(G. Serrano, 2009)
Page | 19
IMPERIAL INSTITUTE OF HIGHER EDUCATION
World Map
PPEC 140
Master of Business Administration (MBA)
Page | 20
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Chapter 2 Impact on International Trade across the World This chapter discusses the impact of recession on international trade based export and Import Figures. First it discusses the impact on the entire world in overall perspective and then it digs in to the seven regions based on geographical means. “…International trade is exchange of capital, goods, and services across international borders or territories…”
(Wikipedia, 2006)
This chapter mainly focuses on providing the figure of the impact on exports and imports around the global. It is intentional approach to focus on goods and services, as it is the best way to elaborate the impact of recession on international trade, because in today’s context, exchange of capital comes under financial services as a part of it. The following table presents the Ten Biggest Export/ Import Nations. It is clear that the gap is considerable between the first and the tenth, which is nearly four times. Therefore, the following figures make the analysis much focused on the following key countries. It is fair enough to evaluate the key traders on each region in order to highlight the impact of recession on international in term of regions as well as the world. Country 01 --02 03 04 05 06 07 08 09 10
Export + Imports
United States
$2,439,700,000,000
Republic of China
$2,115,500,000,000
European Union Germany Japan
France
United Kingdom Netherlands Italy
Hong Kong
South Korea
$2,286,000,000,000 $2,209,000,000,000 $1,006,900,000,000 $989,000,000,000 $824,900,000,000 $756,500,000,000 $727,700,000,000 $672,600,000,000 $668,500,000,000
Table 2-1: Top Trading Nations [Source: (wikipedia, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 21
IMPERIAL INSTITUTE OF HIGHER EDUCATION
The recession made damages to the entire world in many aspects. After being born in United States, it spread all over the world by putting millions of people on hard times. It affected to the world in many terms such as, social, cultural, economical, trade and many more. Simply, it drags back the world behind for several years by teaching number of lessons to the international trade and economy. International Trade is one of the key areas that dramatically affected by the Recession. Even though the domestic trade also get affected, impact on International Trade is much more powerful as it links to Foreign Exchange Rates, Gross Domestic Product (GDP), Trade Balances‌etc. The International Trade mainly based on Exports and Imports, in term of both Commercial Services and Goods.
Export
Import
(Services/ Goods)
(Services/ Goods)
International Trade
Figure 2-1: Key Components in International Trade [Source: Research Data]
However, 79% of the international trade is based on Merchandises (Goods) and rest of the 21% is accountable for commercial services. In 2009, the total value of International Trade has reached $15459 Billion Dollars.
21%
Merchandise
79% Commercial Services
Figure 2-2: Total Percentage of Merchandise and Commercial Services [Source: (World Trade Organization, 2010)]
Finally, it is important to understand how the international trade market share has been spread across the world. Top 5 contributors are accountable for 50% of the entire exports and imports. Therefore, it is fair to assume that the evaluation on those contributors can depict a clear picture on the impact of recession on international trade. [Appendix C and D]
PPEC 140
Master of Business Administration (MBA)
Page | 22
IMPERIAL INSTITUTE OF HIGHER EDUCATION
16% EU 13%
China United States
50%
Japan 11% 4%
Korea, Other
6%
Figure 2-3: International Trade World Market Share [Source: (World Trade Organization, 2010)]
Dual Impact Nature In a recession, people do not spend, then the demand goes down, in other words imports get decreased. As a result of that, the Exports also get decreased. For example, when the apparel demand in United States goes down, it directly impact on Sri Lankan Exports. Similarly, when the demand of electronic items in India gets increased, exports of china also get increased. Two-way impact always reflects in International Trade around globe.
Figure 2-4: Dual Impact on International Trade [Source: Research Data]
Export/ Imports Trade by Products (Ex: Figure 2-18) are created using the data published by International Trade Centre (ITC, 2010). Charts visualize the growth of the top Five (5) trade products as a percentage on each selected country. Highest valued product lies at the bottom of the chart and goes up in decreasing order. [Please refer to each Figure Caption for more details]
PPEC 140
Master of Business Administration (MBA)
Page | 23
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.1 Impact on Entire World When the entire global aspects are considered, the international trade volumes have gone down by 12% due to the world recession. When compared with the previous recessions and its impacts, the current drop in world trade has been the worst scenario off the past five decades. (World Trade Organization, 2010)
Figure 2-5: Volume of World Merchandise Exports, 1965-2009 (Annual % change) [Source: (World Trade Organization, 2010)]
The primary cause for this steep decline is the sudden contraction of global demand for most of the commodities. This along with some of the protectionist measures, limited trade finance availability (Due to subprime mortgage crisis) and by the presence of global supply chains have also contributed to this decline. In the previous recession, the Asian crisis in 1990’s, countries such as Thailand, Korea, and Indonesia were able to export their way out of the recession because economic superpowers at that time (United States) were sustaining growth. However, this cannot be the solution in this instance where almost all sound economies are being affected and were synchronized all over the world (Cline, 2009)
PPEC 140
Master of Business Administration (MBA)
Page | 24
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Figure 2-6: Volume Growth in World Merchandise Exports Trade by Region (Year to year % change in dollar values [Source: (World Trade Organization, 2010)]
Due to the sharp reduction of wealth in the society, households and firms restricted themselves with consuming almost all consumer goods. The worst affected were the consumer durables such as vehicles, and investments (Ex: industrial machinery) as they were able to postpone these decisions. These buying decisions made a huge impact to trade where ultimately the suppliers of the raw materials were affected, hence all the industries. Even though the output of these consumer durables and investments are not that significant, it encompasses a major share of international trade. In the following table, highlighted area shows the downturn in growth very clearly which occurred in 2008Q3 - 2009Q3. (World Trade Organization, 2010)
Table 2-2: Quarterly Growth in World Trade in Manufactures by Product, 2008Q1-- 2009Q3 (y-o-y percentage change in current US dollars) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 25
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Usually, Exports are accountable for a considerable portion on GDP. However, as a result of declining the exports, the Ratio of world exports of goods and commercial services to GDP has declined dramatically due to the recession. Finally, from here onwards, self described charts are used to shows the impact of Figure 2-8: Ratio of World Exports of Goods and Commercial Services to GDP, (Index 2000=100) [Source: (World Trade Organization, 2010)]
recession on international trade in many aspects. At a glance, it is clearly visible that
most of the trade figures contain negative growth in year 2009 due to the recession. The varying of the percentage on each situation shows the gravity of the impact. 2007 16
2008
2009 20
15
12
Merchandise
Commercial services -13 -23
Figure 2-7: World Exports Growth of Merchandise and Commercial Services (%) [Source: (World Trade Organization, 2010)]
2007 20
20 12
Commercial services
16
2008
2009 15
Transport
23
11
12
Travel
Other commercial services -10
-11
-13 -21
Figure 2-9: World Exports Growth of Commercial Services by Major Categories (%), 2009 [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 26
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007
2008
2009 6.4
6.1 2.2
2.1
Imports
Exports
-12.2
-12.9 Figure 2-11: Worlds Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007 15
2008
16
2009 16
Imports
15
Exports
-23
-24 Figure 2-10: Worlds Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007
2008
2009 20
19 13
12
Imports
Exports -12
-13
Figure 2-12: Worlds Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 27
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.2 Impact on African Region Trade in African countries has had a significant impact due to the recession. This can be seen from the falling commodity prices as well as the declining exports volumes. In terms of the price, the most affected commodity is oil, where the price has fallen even below the 50% of the original price between February of 2009 and 2010.
Figure 2-13: Price Indices of Major Commodity Groups - Africa, 2007-2009 [Source: (United Nations, 2009)]
Due to the slowdown in key markets, namely US, Europe and China, the import and export volumes of the African region have reduced significantly. Between the years 2007 and 2008, the growth of exports have fallen from 4.5% to 3% where as the imports have also fallen from 14% to 13%. (United Nations, 2009) In 2009, South African exports markets are dropped as much as United States of America (-39.2%), Japan (-49.6%), Germany (-38.9%), United Kingdom (-38.8%), Switzerland (46.1%), India (-9.3%). Again, South African import are also reduced from China (-16%), Germany (-25%), United States of America (-29.7%), Saudi Arabia (-42%), Japan (-36.6%), Iran (-21%), United Kingdom (-29%). (ITC, 2010) Year 2009
Exports (%)
Goods
South Africa
-22
Services
-9
Imports (%)
Goods
-28
Services
-16
Table 2-3: African Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 28
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007 13.8
2008
2009
14.1
4.8 0.7 Imports
Exports -5.6
-5.6
Figure 2-14: African Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007 23
2008
2009 28
27 18
Imports
Exports -16 -32
Figure 2-15: African Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
28
27
2007
2008
2009 19
Imports
19
Exports -11
-11
Figure 2-16: African Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 29
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Vehicles other than railway, tramway
Iron and steel 2009 Ores, slag and ash
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Pearls, precious stones, metals, coins, etc
-60
-40
-20
0
20
40
60
80
Figure 2-17: South Africa Export Trade by Products – Growth Rate (%) [Source: (ITC, 2010)]
Commodities not elsewhere specified
Vehicles other than railway, tramway 2009 Electrical, electronic equipment
2008 2007 2006
Nuclear reactors, boilers, machinery, etc
Mineral fuels, oils, distillation products, etc
-60
-40
-20
0
20
40
60
80
Figure 2-18: South Africa Import Trade by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 30
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.3 Impact on European Region Europe, like any other region was also affected by the recession. Due to the fall of commodity prices, and commodity exporters, they have lost a huge amount of export earnings. The trade levels of Europe have fallen by a quarter and a half percent. The reason behind this had been the decline of national income, consumption and the collapse of trade financing. During February 2009, US merchandising exports had been 22.6% lower than the previous year and imports, 30.4% lower. Exports and imports to Russia have also declined where the exports have fallen by 47.5% and imports by 36.5%. (United Nations, 2009)
Year 2009
Exports (%)
Goods
Services
Imports (%)
Goods
Services
United Kingdom
-24
-16
-24
-19
German
-22
-11
-21
-10
France
-21
-14
-22
-12
Italy
-25
-15
-26
-11
Netherlands
-22
-11
-23
-5
Table 2-4: European Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
When considering trade of Western Europe, it mainly caters internal demand, to the countries under EU. This consisted of a figure of 80% of the total exports in 2007, and only 7.6% were for North American and Australasian markets. Hence they depend on the internal demand more than other regions. It was found that the trade within Europe has deteriorated faster than within regions where it has fallen down by 18%. (Eghbal, 2009)
PPEC 140
Master of Business Administration (MBA)
Page | 31
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007
2008
4.4
2009 4.2 0
-0.6 Imports
Exports
-14.4
-14.5 Figure 2-20: European Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
15
2007
2008
12
2009 16
11
Imports
Exports
-23
-25 Figure 2-19: European Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007 19
2008
2009 21
11
12
Imports
Exports -13
-14
Figure 2-21: European Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 32
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Vehicles other than railway, tramway
Electrical, electronic equipment 2009 Pharmaceutical products
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Nuclear reactors, boilers, machinery, etc
-80
-60
-40
-20
0
20
40
60
80
Figure 2-22: United Kingdom Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Pharmaceutical products
Vehicles other than railway, tramway 2009 Electrical, electronic equipment
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Nuclear reactors, boilers, machinery, etc
-50
-40
-30
-20
-10
0
10
20
30
40
50
Figure 2-23: United Kingdom Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 33
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Optical, photo, technical, medical, etc apparatus
Pharmaceutical products 2009 Electrical, electronic equipment
2008 2007 2006
Vehicles other than railway, tramway
Nuclear reactors, boilers, machinery, etc
-40
-30
-20
-10
0
10
20
30
Figure 2-24: Germany Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Pharmaceutical products
Vehicles other than railway, tramway 2009 Electrical, electronic equipment
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Nuclear reactors, boilers, machinery, etc
-40
-30
-20
-10
0
10
20
30
40
50
60
Figure 2-25: Germany Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 34
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.3 Impact on South and Central American Region The commodity prices of goods have been affected in this region as well. The prices have roughly gone down by 50% from the highs in mid 2008. Among worst hit is the energy prices which has fallen by 60%, and food and metals by 35%. These declines in prices have deteriorated the international trade in the region. (United Nations, 2009)
Figure 2-26: Commodity Price Index, 2008-2009 - South and Central American Region [Source: (United Nations, 2009)]
Brazil is the largest and the most important trader in this region. Their exports have declined in many territories such as United States of America (-43.2%), Argentina (-27.4%), Netherlands (-22.3%), Germany (-30.2%), Japan (-30.2%), United Kingdom (-1.7%), Venezuela (-29.9%). At the same time, Brazil has reduced their imports due to the recession. United States of America (-21.9%), China (-20.6%), Argentina (-14.9%), Germany (-18%), Japan (-21.1%), Republic of Korea (-11%), Nigeria (-29%) are the main countries that affected due the Brazilian import reduction. (ITC, 2010) Year 2009
Exports (%)
Goods
Brazil
-23
Services
-9
Imports (%)
Goods
-27
Services
-1
Table 2-5: South and Central American Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 35
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007
17.6
2008
2009
13.3 3.3 Imports
0.8 Exports -5.7
-16.3 Figure 2-27: South and Central American Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007 25
2008
2009
30 21 14
Imports
Exports
-24
-25
Figure 2-28: South and Central American Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
22
21
2007
2008
2009 18
Imports
16
Exports -8
-8
Figure 2-29: South and Central American Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 36
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Sugars and sugar confectionery
Meat and edible meat offal 2009
Oil seed, oleagic fruits, grain, seed, fruit, etc, nes
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Ores, slag and ash
-40
-20
0
20
40
60
80
Figure 2-30: Brazil Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Organic chemicals
Vehicles other than railway, tramway 2009 Electrical, electronic equipment
2008 2007 2006
Mineral fuels, oils, distillation products, etc
Nuclear reactors, boilers, machinery, etc
-60
-40
-20
0
20
40
60
80
Figure 2-31: Brazil Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 37
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.4 Impact on North American Region United States along with the other North American countries have been the largest initiators of the present world financial as well as the trade crisis. The primary reasons behind is are that, it being a large region in global trade arena and the fact that most of the suppliers for majority of the counties have been from the countries of this region. The impact of the region to the world can be noted as follows. •
Imports from China dominated the US real import decline; falling Chinese exports impacted exports Asia-wide along global supply chains.
•
Canada and Mexico figured disproportionately in US export declines.
•
The subprime crisis impacted US housing markets, in turn affecting US imports of construction materials. Prices of sawn wood declined well before US home prices. Canada lost nearly half of its global exports of sawn wood as a result.
•
The motor vehicle sector has been unusually prominent in the current business cycle, with an unusually sharp downturn and recovery of trade on both the import and export sides.
•
The high degree of North American integration in this sector caused falling demand for autos to reverberate in regional auto parts trade.
•
US imports of capital goods and intermediate inputs have continued to be weak, consistent with the pattern in US GDP data which show a consumption-led recovery with investment lagging. (Ferrantino & Larsen, 2009)
As a result trade within the region fell by 10% and the exports have also fallen by 7% (World Trade Organization, 2009) Year 2009
Exports (%)
Goods
Imports (%)
Services
Goods
Services
United States
-18
-9
-26
-9
Canada
-31
-12
-21
-11
Mexico
-21
…
-24
…
Table 2-6: North American Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 38
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007
2008
2009 4.8
2 Imports -2.4
2.1 Exports
-14.4
-16.3
Figure 2-33: North American Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007 6
2008
2009 11
8
Imports
11
Exports
-21
-25 Figure 2-32: North American Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007
2008
2009 15
9
9
7
Imports
Exports -10
-10
Figure 2-34: North American Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 39
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Optical, photo, technical, medical, etc apparatus
Vehicles other than railway, tramway 2009 Aircraft, spacecraft, and parts thereof
2008 2007 2006
Electrical, electronic equipment
Nuclear reactors, boilers, machinery, etc
-40
-30
-20
-10
0
10
20
30
40
Figure 2-35: United States Exports by Products – Growth Rate (%) [Source: (ITC, 2010)]
Pharmaceutical products
Vehicles other than railway, tramway 2009 Nuclear reactors, boilers, machinery, etc
2008 2007 2006
Electrical, electronic equipment
Mineral fuels, oils, distillation products, etc
-50
-40
-30
-20
-10
0
10
20
30
40
Figure 2-36: United States Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 40
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.5 Impact on Asia Pacific Region This is one of the worst affected regions due to the fact that most of the economies in this region are trade oriented. Most affected were the enterprises which were vertically integrated in the supply chain which caters the US and EU Markets. The situation heighted in the last quarter of 2008 due to sharp deteriorating exports volumes with low domestic demand. Accelerated decreasing imports are another major concerning factor in the region. Ex: China – January 2009, the YOY decline was 43.1%. Therefore it can be said that the region was in the midst of an industrial crisis. (United Nations, 2009) It is expected that this contraction due to the global recession will be greater than the depression during 1998 and 2001. This will put pressure on trade and current account balances. It is likely that the export recovery will be slow during the year 2010 a well due to sluggish and prolonged recovery in the west. Therefore, without a recovery in US, it is highly unrealistic that the Asian markets can achieve sustainability. Therefore for the foreseeable future, the region has to depend on the domestic demand. (Plessis, 2009)
Reduction of export and imports are also made an impact on Balance of Payment on each country. China (-33.6%), Japan (59.5%), Australia (-2.7%), Sri Lanka (-58.0%). (ITC, 2010) Year 2009
Exports (%)
Goods
Imports (%)
Services
Goods
Services
China
-16
-12
-11
0
Japan
-26
-15
-28
-11
India
-20
…
-24
…
Australia
-18
-17
-13
Sri Lanka
-13
-31
…
-7 …
Table 2-7: Asian Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 41
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007
2008
2009 11.7
8.2 4.7
5.5
Imports
Exports -7.9 -11.1
Figure 2-37: Asia Pacific Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007
2008
21
2009 16
15
Imports
15
Exports -18
-21 Figure 2-38: Asia Pacific Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007 18
2008
2009 22
14
14
Imports
Exports -11
-13
Figure 2-39: Asia Pacific Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 42
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Furniture, lighting, signs, prefabricated buildings
Articles of apparel, accessories, not knit or crochet 2009
Articles of apparel, accessories, knit or crochet
2008 2007 2006
Nuclear reactors, boilers, machinery
Electrical, electronic equipment
-20
-10
0
10
20
30
40
50
Figure 2-40: China Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Optical, photo, technical, medical, etc apparatus
Ores, slag and ash 2009 Mineral fuels, oils, distillation products, etc
2008 2007 2006
Nuclear reactors, boilers, machinery, etc
Electrical, electronic equipment
-40
-20
0
20
40
60
80
Figure 2-41: China Import by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 43
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Optical, photo, technical, medical, etc apparatus
Commodities not elsewhere specified 2009 2008
Nuclear reactors, boilers, machinery, etc
2007 2006 Vehicles other than railway, tramway
Electrical, electronic equipment
-50
-40
-30
-20
-10
0
10
20
30
Figure 2-42: Japan Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Optical, photo, technical, medical, etc apparatus
Ores, slag and ash 2009 2008
Nuclear reactors, boilers, machinery
2007 2006 Electrical, electronic equipment
Mineral fuels, oils, distillation products
-45
-25
-5
15
35
55
Figure 2-43: Japan Import by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 44
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Pearls, precious stones, metals, coins, etc
Rubber and articles thereof 2009 Coffee, tea, mate and spices
2008 2007 2006
Articles of apparel, accessories, not knit or crochet
Articles of apparel, accessories, knit or crochet -40
-30
-20
-10
0
10
20
30
Figure 2-44: Sri Lanka Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Knitted or crocheted fabric
Cotton 2009 Electrical, electronic equipment
2008 2007 2006
Nuclear reactors, boilers, machinery, etc
Mineral fuels, oils, distillation products, etc
-60
-40
-20
0
20
40
60
80
Figure 2-45: Sri Lanka Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 45
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.6 Impact on Middle East The dominant export of this region is fuel, which consists 64% of the total Arab exports. In 2009 the price of oil declined sharply, hence the regional export income correspondingly declined. (United Nations, 2009) Moreover, most of the oil exporters of the region are still maintaining high levels of government spending. This provides an important stimulus to both domestic as well as global demand. By having lower oil prices and high spending, the oil exporters expect to cause a turnaround in their external current account position from a surplus of $400 billion last year to a deficit of toughly $10 billion by the end of 2009 assuming the current oil price prevails. (IMF, 2009) The countries such as Bahrain, Oman and UAE, which are trying to diversify their economies, are likely to sustain where exports of machinery and transport equipments have grown. However they will primarily depend on their main trading partner (EU). (United Nations, 2009)
Year 2009
Exports (%)
Goods
Imports (%)
Services
Goods
Services
Saudi Arabia
-40
…
-20
…
UAE
-27
…
-21
…
Turkey
-22
-6
-30
…
Table 2-8: Middle East Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 46
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007 14.6
2008
2009
14.6
4.5
Imports
2.3 Exports -4.9
-10.6 Figure 2-46: Middle East Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
2007 25
2008
2009
28
33
16
Imports
Exports -18 -33
Figure 2-47: Middle East Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007
2008
2009
32 18
16
Imports
20
Exports -13
-12
Figure 2-48: Middle East Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 47
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Plastics and articles thereof 2009 2008
Organic chemicals
2007 2006
Mineral fuels, oils, distillation products, etc
-40
-20
0
20
40
60
80
100
Figure 2-49: Saudi Arabia Export by Products – Growth Rate (%) [Source: (ITC, 2010)] *Estimated
Articles of iron or steel
Iron and steel 2009 Electrical, electronic equipment
2008 2007 2006
Vehicles other than railway, tramway
Nuclear reactors, boilers, machinery, etc
-50
0
50
100
150
Figure 2-50: Saudi Arabia Imports by Products – Growth Rate (%) [Source: (ITC, 2010)] *Estimated
PPEC 140
Master of Business Administration (MBA)
Page | 48
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.7 Impact on Commonwealth of Independent States Region CIS mainly comprise with 10 counties. The most significant economy affected on this region was the Russian economy where they also suffered from the collapsing oil prices and from some of the price policies adopted, where high oil prices were made possible. Ukraine and Belarus are also having difficult conditions due to various reasons. The overall exports of the region have fallen down, as 7.5% growth in exports in 2007 has fallen down to 2% by the end of year 2008. (World Trade Organization, 2009) As the largest trader in CIS region, Russia plays a vital role there. By evaluating the impact of recession on international trade based on Russia can create an overall picture. CIS region as well as, Russia is rich in term of natural resources. Russia holds the largest natural gas reserves and it also accountable for world’s second largest coal reserves. At the same time CIS maintains the eighth largest oil reserves in the world. Due to the nature of high natural resources, there 80% of the exports comprise with Oil, natural gas, metal and timber. Russia exports were valued around 472 billion dollars in 2008 and were dropped to 296 billion dollars in 2009 due to the recession. Russia main exports were declined to Netherlands (-38.3%), Italy (-51.6%), Germany (-64.2%), Turkey (-62.9%), Ukraine (-58.7%), Poland (-46.5%) and China (-23.9%). Due to the recession, above countries have reduced their imports. This directly affect to the Russian exports by declining their export demand. (ITC, 2010) Russian main imports are also declined from the countries such as China (-34.3%), Germany (-37.9%), Ukraine (-44.8%), United States of America (-37.4%), Italy (-28.4%), Japan (-61%), France (-38.4%). Due to the recession, Russia has also reduced their imports which also reflected in other end as well. (ITC, 2010) Year 2009
Exports (%)
Goods
Russia
-36
Services
-17
Imports (%)
Goods
-34
Services
-19
Table 2-9: CIS Region - Country based Trade Growth (%) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 49
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2007 19.9
2008
2009
16.3 7.5
Imports
2.2 Exports -9.5
-20.2 Figure 2-51: CIS Region Merchandise Trade Growth (%) by Volume [Source: (World Trade Organization, 2010)]
35
32
2007
2008
2009
35
21
Imports
Exports
-33
-36
Figure 2-52: CIS Region Merchandise Trade Growth (%) by Value [Source: (World Trade Organization, 2010)]
2007 30
2008
2009 27
26
Imports
28
Exports -21
-18
Figure 2-53: CIS Region Commercial Services Growth (%) by Value [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 50
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Nuclear reactors, boilers, machinery, etc
Aluminium and articles thereof 2009 Commodities not elsewhere specified
2008 2007 2006
Iron and steel
Mineral fuels, oils, distillation products, etc
-120
-100
-80
-60
-40
-20
0
20
40
60
Figure 2-54: Russia Export by Products – Growth Rate (%) [Source: (ITC, 2010)]
Meat and edible meat offal
Pharmaceutical products 2009 Vehicles other than railway, tramway
2008 2007 2006
Electrical, electronic equipment
Nuclear reactors, boilers, machinery, etc
-80
-60
-40
-20
0
20
40
60
80
100
Figure 2-55: Russia Imports by Products – Growth Rate (%) [Source: (ITC, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 51
IMPERIAL INSTITUTE OF HIGHER EDUCATION
2.8 Summary on International Trade Figures Throughout this chapter, large verities of charts are presented in order to demonstrate the impact of recession on international trade. At the beginning, analysis are carried out focusing on world wide as a whole and later the figures are presented in geographical region basis. Impacts of the regions are discussed in a brief manner by evaluating the major traders in the region. The trade figures that are presented in this chapter provide the clear picture of the gravity of the impact due to the recession. Many of the countries have reduced their consumption, which means the imports. As a result of that, the other end of the trade link also gets suffered due to the reduction their exports. Even though the international trade figures reflect the impact of the recession for a greater extend, it is important to look at the impact from other perspectives as well. The next chapter is evaluating the impact of recession on international trade more in qualitative point of view. Basically it elaborates on aftermath of the recession and the lessons learned during the recession related to international trade.
PPEC 140
Master of Business Administration (MBA)
Page | 52
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Chapter 3 Highlights of the Recession on International Trade
It is fair to say that the global recession was caused by the global financial crisis, which was then fuelled by an oil crisis and a food crisis. It also had few minor contributors including extreme climatic conditions and security issues due to natural and manmade disasters. The result was escalating prices in commodities, drop in demands, and lack of confidence in market place, and eventually things got worsened with high numbers in layoffs and unemployment, creating tsunami waves of un-affordability of goods and services including the essentials.
Figure 3-1: Monthly Unemployment Rates [Source: (seekingalpha, 2009)]
This had a direct impact on international trade, where top commodities includes oil, food, medicine, manufactured goods, financial and outsourced services. The relevant facts and figures were presented and discussed before. However, the question remains, is it the only effect that the global recession had on international trade? The answer is quite contrary, and much more alarming. The impact of the global recession on international trade was actually felt in the aftermath of the recession. To address these crisis situations initiatives were taken across the globe from local to international events lead by world leaders including policymakers, scholars, economists, scientists, and corporate giants to religious authorities, farmer organizations, worker’s unions, even student and youth brigades.
PPEC 140
Master of Business Administration (MBA)
Page | 53
IMPERIAL INSTITUTE OF HIGHER EDUCATION
At forums from grass-root stages to international arenas, in person and online, these top actors met, discussed, and agreed on solutions to address two of the major concerns of the global recession. Primarily to adopt strategies to come out of the recent global downfall-a financial meltdown, a food crisis, & an energy crisis, and, secondly, to indentify and propose remedies for any possible causes in future which could lead to a similar global crisis. The same was echoed all over the world, as it is also detailed in the official Summary of the 34th Group of Eight Summit, held in Japan in 2008. (G8 Summit, 2008) Most governments in the world recognized the need for immediate changes in fiscal and monetary policy, and offered a range of “bail-out” or “economic stimulus” packages to top players in financial and corporate world. Overnight, without much hesitation, government interventions in regulation and financial position was the norm practiced around the world. However in application much of the credit goes to Asian Governments. Addressing an IMF meeting in March this year, prominent economist John Lipsky said “…As you know well, much of the force of the economic growth rebound has come from Asia, where the recovery has occurred earlier and with more force than elsewhere. Prompt action by this continent’s policymakers, including the rapid rollout of large and credible fiscal stimulus, has propelled the region's recovery and contributed to the global turnaround… ” (Lipsky, 2010) and it confirms how the success of government involvement has played a dominant role in the recovery process. Even the US Government, considered as godfather of capitalism, had to borrow a page or two from socialist readings to save America’s financial and corporate giants. For the first time in history, the US Senate adopted a piece of legislation to the effect of granting the
PPEC 140
Master of Business Administration (MBA)
Page | 54
IMPERIAL INSTITUTE OF HIGHER EDUCATION
US Treasury to spend $700 billion to purchase what they termed as “distressed assets” in the financial sector. This act, the Emergency Economic Stabilization Act of 2008, saw drastic changes in the US not only in economic terms but also in political turfs. (United States Government, 2008) Legislative enactments of this nature saw a silver-line among dark clouds in Western society in accommodating socialist policies in governance. Hence, the global recession contributed towards a series of policy, leadership and regime changes in the developed world. Few examples of such electoral changes, resulted by the global recession, would be Australia (late 2007), the US (late 2008) and Japan (mid 2009). These are among the top and most influential players in international trade game.
The new labour Prime Minister of Australia Mr. Rudd, a senior carrier diplomat specialized in Chinese affairs, replaced the pro-American & liberal market champion Mr. Howard in 2007. Similarly, if not for the global recession what Mr. Obama spoke on stage during 2008 US Presidential Elections would have never ever found listeners. The American people were overwhelmingly ready to cheer and accept his pro-socialist propositions. Japanese, too, brought a change of government by defeating the ruling party, which was in power since 1955, and brought-in a new regime. (Wikipedia, 2009) Arguably, these are a few examples of global recession had on governments and politics, and across the world people lost faith in liberal market policies and even capitalist principles. Thus, this change in policy and administration styles will bring a direct impact on international trade, especially, when it happens within dominant players, ultimately leading onto changing rules of the international trade game. Tougher regulations and monitoring in the financial sector naturally builds up stress in investments and businesses. However, in continuing its policy, the US Government continued with its aggressive drive on Foreign Direct Investments (FDIs). Idea was to produce products and services for the domestic consumers at lower costs. This also helps firms to bounce back as they can continue to earn a decent margin of profits. Indirectly this helps to build-up a new class of spenders in local and foreign markets, who later transforms to become consumers of American goods. Hence, instead of ‘aid recipients’
PPEC 140
Master of Business Administration (MBA)
Page | 55
IMPERIAL INSTITUTE OF HIGHER EDUCATION
‘trade partners’ are developed.
This view point was clearly supported by Robert
Hormats, Under Secretary for Economic, Energy and Agriculture, at the US Council for International Business; “…While the outlook for global FDI may seem poor to some, there is reason to believe U.S. and global investment will improve in the medium-term…...FDI contributes enormously to our economic success. And we need to pursue policies that enhance confidence among investors. This is a key to expanding our economic recovery and global economic growth. Its how we create jobs, promotes exports, sustain manufacturing and service capabilities, and develop critical infrastructure in the U.S...”
(Hormats, 2010)
Almost after four decades in an instant the world was overwhelmed with soaring crude oil prices. Prices climbed beyond $140/barrel and within the same calendar year it took a dip of almost $100 down to $40/barrel, and since settled between $40 to $60/barrel. An oil price fluctuation of this magnitude directly impacts the entire world, and especially international trade. On one hand, oil is one of the most traded commodities in the international market, and secondly, it is the number one source which energizes international trade.
Figure 3-2: Price of Oil (2003-2008) [Source: (wikimedia, 2009)]
PPEC 140
Master of Business Administration (MBA)
Page | 56
IMPERIAL INSTITUTE OF HIGHER EDUCATION
High climbs and unpredictable fluctuations in oil prices brought about a global oil crisis, and to make thing even worse it fell parallel to the global financial crisis. As a result an integral part of international trade the transport networks, local and international, was hit hard. Cargo and passenger transport mediums such as airline, shipping, railway, and motor transport had to bare unbudgeted huge energy costs. Even the cargo and passenger transport business firms that managed to survive the crisis had to introduce massive cut downs in several departments, and at worse layoffs. A large number that was not able to absorb high costs had to close down, further limiting transport channels and driving the cost of transhipments higher. In addition as ‘Crude Oil’ is the fundamental ingredient in most traded goods and services, costs spiralled in producing chemicals for industries, pharmaceuticals for health services, fertilizers for agriculture and supply of electrical power to grids across the world. Therefore, these unpredictable price fluctuations immensely contributed towards low demand and lack of trust in the market, and with less demand the supply and production was hit hard, and further escalating the crisis. This resulted in a new surge in World Forums to initiate and expedite the shift from an almost total dependency on oil into new avenues of sustainable and renewable energy sources. Political as well as business leaders took progressive measure in promoting and facilitating new sources such solar, wind, bio-fuel, etc for energy. New instruments through legislative and financial systems were developed to facilitate such technology, research and development. Global, regional, and local funds amounting trillions of dollars were created to finance such initiatives while an array of incentives and benefits were thrown by governments in support of investments.
Figure 3-3: Wind Energy [Source: (plainswindeis, 2009)]
PPEC 140
Master of Business Administration (MBA)
Page | 57
IMPERIAL INSTITUTE OF HIGHER EDUCATION
In its 2009 annual report, the OPEC strongly recalls, “…Developed countries, having the financial and technological capabilities, and bearing the historical responsibility for the state of the Earth’s atmosphere, should take the lead in mitigation and adaptation efforts, as well as in providing technology and financial resources, as enshrined in the United Nations Framework Convention on Climate Change, its Kyoto Protocol and the Bali Action Plan…”
(opec, 2009)
This impacts the future of international trade. What was once a niche market product is now transformed into a brand new spectrum of industries in technology and energy? It will further support new areas of research and development and transfer innovations and applications to different geographical locations across the world. Thereby, international trade will move into a new phase and dimension, altogether. Similarly, a whole new grade of blue and white collar employment will grow, and with it inherit higher spending power. And it doesn’t stop there.
Figure 3-4: Maldives' Cabinet Meeting Held Under Water Wake up call on Climate Change [Source: (MarineBuzz, 2009)]
Especially, around the same period as the global financial crisis, and oil crisis, the world experienced extreme climatic conditions. Especially the period from 2007 till 2009, across the globe, including developed nations, was caught in heavy rains-floods-snow, extreme heat-dryness, strong winds-tornados-cyclones, and in more unpredictable weather than ever before. Extreme or unpredictable climates on one hand immensely
PPEC 140
Master of Business Administration (MBA)
Page | 58
IMPERIAL INSTITUTE OF HIGHER EDUCATION
affects the global production (especially food production, which is further discussed below), and on the other, international trade channels. As a result, large oil producing and consuming nations have understood the direct impact of carbon emission has on global climate, and for decades have been in dialog in search of remedies to this grave problem. Protocols against global warming and climate change have been reached under various different combinations, with Kyoto Protocol leading the way.
Since, facing the atrocities of devastating weather, world leaders and organizations have strongly come forward with drastic changes in use of sustainable and renewable energy. However, the OPEC with its cartel in world’s oil supply believes, “…There is no doubt that technology will remain pivotal to the industry’s future. Thus, it is essential that the evolution of technology continues, so that the industry can carry on developing, producing, transporting, refining and delivering oil to end-users in an ever more efficient, timely, sustainable and economic manner…”
(opec, 2009)
On one side, the OPEC proposes to continue with fossil fuels, but with improved technologies, and on the other blame western economies for ruining the environment. Therefore, though it is not keen on providing technologies or financial resources initially, there is a positive advocacy towards that effect. This means two things for international trade; 1.not just governments but international organizations would lead initiatives in changing the global energy map, and 2. Until such resources change the balance of energy production oil will continue to dominate international trade even at worst climatic conditions! More than the shocks of financial crisis or the heat of oil crisis, what people across the world felt most was the food crisis. Though, financial and oil crisis had an indirect impact on food supply chains and prices, extreme climatic conditions made a devastating impact by destroying hundreds and thousands of acres of agricultural produce across the globe. Food produce hit low and supply was further affected by financial and oil crisis, hence, escalating food prices and that in short supply was the ultimate result.
PPEC 140
Master of Business Administration (MBA)
Page | 59
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Without being able to even to meet break-even points, big time agro producers as well as small time farmers were worse hit. Financial difficulties and loss of faith in climatic conditions discouraged and prevented farmers from cultivating the next season, thereby further aggregating the supply crisis. World Leaders continued to address this issue at all forums. As it was reported on the official White House website
“…At the April 2009 G20 Summit, President Obama called upon Congress to double U.S. support for agricultural development in developing countries to more than $1 billion. Recognizing that solving food insecurity requires engaging the world’s poorest populations toward rapid, sustained economic growth, the President tasked USAID to take a leading role in the endeavour…” (The White House, 2010) The USAID supports President Obama’s position by assisting, “…developing countries harness agriculture for economic growth to increase the supply and lower the cost of food by making agriculture more efficient, productive, and sustainable…” (usaid, 2010) This position is further confirmed as Massaysay award winner Kiran Bedi states, “…Everyone has to think global recession is a challenge posed to the nation and work accordingly keeping agriculture at the centre-stage. It is also important that agri-management schools are started at village level…" (Indian Express, 2009) The human population is at an exponential growth, and is projected to reach 8 billion by 2030, (opec, 2009) which is a growth of 2 billion, an increase of 33% people in just 20 years. With complications faced in distribution channels, feeding an additional 2 billion mouths has got the most attention in global forums on recession. Just as President Obama committed $ 1 billon, other governments and multilateral organizations, such as SAARC, BRIC, ASEAN and their membership, has already allocated funds for assisting farmers to
PPEC 140
Master of Business Administration (MBA)
Page | 60
IMPERIAL INSTITUTE OF HIGHER EDUCATION
develop new financial and insurance tools to reduce risk, for research and development in technology to produce crops which could withstand extreme climatic conditions and at the same time produce high yields, but importantly all at an affordable cost-economically and environmentally. (sawtee, 2010) These measures were reached only because the food crisis contributed towards the global recession, and, thus, remedies would carry an impact on international trade. New regulations, legislative changes, stimulus funds, more research and development, high yielding crops, etc will continue to assist international trade in the effort to settle inequalities in food distribution. As Kiran Bedi’s wish more nations and territories would work hard to first, become selfsufficient in essential crops, and secondly, to build on their competitive advantages, while the auxiliary services, such as financing, education, machinery and consumption patterns will expand. Dr. Vinayak Purohit, a scholar of economics and sociology from Pune, India, addressing the Philip Gunawardena memorial lecture at the BMICH, Colombo, in 20062007 said, “…Today the world has become nothing but LPG, and am not referring to the liquid petroleum gas, but something more flammable. I refer to liberalization, privatization and globalization…… soon these very elements will bring economic and social collapse, and then the people including those who hailed it would just walk away from it. Then the world will have to move into the middle path of socio-economic policy where Asia will champion…” (Purohit, 2007) True to his predictions the financial collapse began in 2007 due to ultraliberal policies of the west and by 2009 globalization helped to create a global recession. But by 2010, most nations in the world are now taking more of a regulated approach with sensitivity to social order rather than lump profits. A growing wave of concern towards the environment and ethics is taking place around the world. Thus, the ultimate impact of the global recession would create a whole new league with new laws and regulations and quality players will soon dominate the international trade place.
PPEC 140
Master of Business Administration (MBA)
Page | 61
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Conclusion
The objective set for this assignment was to identify the impact of recession towards world trade, and from the above facts it’s clearly evident that world trade has been badly hit by the recessionary activities around the world. From the statistics a salient observation could be made that the most affected economies had been the countries that are heavily dependent of oil, where a large proportion of their export income was due to exporting of oil. A recession which was started mainly as global financial crisis, oil crisis and a food crisis in North America had a worldwide impact due to globalization. Integrated supply chains of large cooperate around the world made a huge impact in spreading the recession globally. From this research it was evident that, the iron and steel manufacturers had been the most affected as the YOY growth of the industry has gone down by 55%. When regions are considered, the most affected regions have been CIS countries and the Middle East due to the oil crisis. In the future it’s believed that socio-economic policies will be adopted by most countries instead of liberalization, privatization and globalization. Hence new markets will emerge where most of the Asian countries will prosper due to the fact that their economies are more based on socio-cultural policies. This along with newly introduced laws and regulations will govern international trade to the future.
PPEC 140
Master of Business Administration (MBA)
Page | 62
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Reference Bair, S.C., 2007. Possible Responses to Rising Mortgage Foreclosures before the Committee on Financial Services. Speech. Washington: Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation. Bair, S.C., 2007. www.fdic.gov. [Online] Available at: http://www.fdic.gov/news/news/speeches/archives/2007/chairman/spapr1707.html [Accessed 07 May 2010]. Burns, D., 2008. 12 key dates in the demise of Bear Stearns. [Online] Available at: http://blogs.reuters.com/from-reuterscom/2008/03/17/12-key-dates-in-the-demise-of-bear-stearns/ [Accessed 08 May 2010]. Cline, W.R., 2009. Trade, Finance, and the Global Recession. Symposium Article. Washington: Peterson Institute for International Economics V Symposium on International Trade, Brazil Institute, Woodrow, Wilson International Center for Scholars, Washington, DC. Davis, M., 2009. The Impact Of Recession On Businesses. [Online] Available at: http://www.investopedia.com/articles/economics/08/recession-affecting-business.asp [Accessed 06 May 2010]. Eghbal, M., 2009. The global financial crisis: recession bites into Western Europe. [Online] Available at: http://www.euromonitor.com/The_global_financial_crisis_recession_bites_into_Western_Europe [Accessed 21 May 2010]. EncyclopĂŚdia Britannica, 2010. International Trade. [Online] Available at: http://www.britannica.com/EBchecked/topic/291349/international-trade [Accessed 6 May 2010]. Ferrantino, M.J. & Larsen, A., 2009. Transmission of the global recession through US trade. [Online] Available at: http://www.voxeu.org/index.php?q=node/4296 [Accessed 15 May 2010]. G8 Summit, 2008. Summit Summary. Summit Documents. Toyako: Ministry of Foreign Affairs of Japan G8 Summit. Hormats, R.D., 2010. Cross-Border Investment in a Post-Recession World. Speech. Washington: Under Secretary for Economic, Energy and Agricultural Affairs U.S. Council for International Business. IMF, 2009. Middle East, North Africa Weathering Global Crisis. Magazine. Washington: IMF Survey Magazine: Countries and Regions International Monetary Fund. Indian Express, 2009. Global recession is the new challenge: Kiran Bedi. News Paper. Pune: Express News Service Indian Express. ITC, 2010. Market Analysis and Research. Online. Geneva: Trade statistics for international business development International Trade Centre.
PPEC 140
Master of Business Administration (MBA)
Page | 63
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Kose, A.M., Loungani, P. & Terr, M.E., 2009. Out of the Ballpark. World Economic Outlook. Washington: Finance and Development International Monetary Fund. Lipsky, J., 2010. Fiscal Policy Challenges in the Post-Crisis World. Speech. The China Development Forum. MarineBuzz, 2009. Cabinet Meeting Under Water. [Online] Available at: http://greenamherstproject.files.wordpress.com/2009/12/maldives-governments-cabinet-meetingunderwater.jpg [Accessed 20 May 2010]. msnbc, 2007. Will subprime mess ripple through economy? [Online] Available at: http://www.msnbc.msn.com/id/17584725 [Accessed 07 May 2010]. MyBIGinfo, 2009. My Big Info: What is Recession. [Online] Available at: http://www.mybiginfo.com/what-is-recession [Accessed 07 May 2010]. opec, 2009. World Oil Outlook. World Oil. Organization of the Petroleum Exporting Countries. plainswindeis, 2009. [Online] Available at: http://plainswindeis.anl.gov/images/photos/wind_450KW_turbine_IA_V_13764.jpg [Accessed 20 May 2010]. Plessis, P.d., 2009. The Impact of a Global Recession on Asia. [Online] Available at: http://seekingalpha.com/article/125473-the-impact-of-a-global-recession-on-asia [Accessed 28 May 2010]. Purohit, V., 2007. Economics and Sociology. Speech. Colombo: BMICH Philip Gunawardena Memorial Lecture. Recession, 2010. What Is Recession? Economic Recession Definition. [Online] Available at: http://recession.org/definition [Accessed 06 May 2010]. Rodrigo, D., 2010. Strategic Management. Lecture. Colombo: Imperial Institute of Higher Education Imperial Institute of Higher Education. sawtee, 2010. Services Trade in South Asia. Trade Insight. Nepal: South Asia Watch on Trade, Economics, and Environment South Asia Watch on Trade, Economics, and Environment. seekingalpha, 2009. Monthly unemployeement rates November 2007 - April 2009. [Online] Available at: http://static.seekingalpha.com/uploads/2009/6/21/saupload_1_us_eu_umeployment.JPG [Accessed 20 May 2010]. SESRIC, 2008. Trends in International Merchandise Trade: A Review of the OIC Member Countries. Financial. Ankara: Organisation of the Islamic Conference The Statistical, Economic and Social Research and Training Centre for Islamic Countries. The White House, 2010. Doubling Financial Resources Available for Agricultural Development. Fact Sheet. Washington: The White House The White House.
PPEC 140
Master of Business Administration (MBA)
Page | 64
IMPERIAL INSTITUTE OF HIGHER EDUCATION
TheFreeDictionary, 2009. Leverage. [Online] Available at: http://img.tfd.com/mgh/RealEstateEncyclopedia/leverage.png [Accessed 07 May 2010]. United Nations, 2009. The Global Economic and Financial Crisis: Regional Impacts, Responses and Solutions. United Nations Report. New York: United Nations publication United Nations. United States Government, 2008. Public Law 110 - 343 - Secure Rural Schools and Community Self-Determination Act Of 2000. Bills and Statutes. Washington: United States Government Printing Office United States Government, Public and Private Laws. usaid, 2010. Agriculture: Overview. Spotlight. Washington: United States Agency for International Development United States Agency for International Development. Wagner, H., 2005. Globalization and financial instability. International Journal of Social Economics, 2(7), pp.616-38. wikimedia, 2009. Price of Oil 2003-2008. [Online] Available at: http://upload.wikimedia.org/wikipedia/commons/b/b8/Price_of_oil_(2003-2008).png [Accessed 20 May 2010]. Wikipedia, 2006. International trade. [Online] Available at: http://en.wikipedia.org/wiki/International_trade [Accessed 16 May 2010]. Wikipedia, 2009. Politics. [Online] Available at: http://en.wikipedia.org/wiki/Portal:Politics [Accessed 15 May 2009]. Wikipedia, 2010. Leverage (Finance). [Online] Available at: http://en.wikipedia.org/wiki/Leverage_(finance) [Accessed 15 May 2010]. wikipedia, 2010. Recession. [Online] Available at: http://en.wikipedia.org/wiki/Recession [Accessed 05 June 2010]. World Trade Organization, 2009. International Trade Statistics 2009. Statistics Report. Geneva: World Trade Organization World Trade Organization. World Trade Organization, 2010. World Trade 2009, Prospects for 2010. Press Release. Geneva: World Trade Organization World Trade Organization.
PPEC 140
Master of Business Administration (MBA)
Page | 65
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Appendix A
Appendix A: World Merchandise Trade by Region and Selected Country, 2009 (Billion dollars and percentage) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 66
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Appendix B
Appendix B: World Exports of Commercial Services by Region And Selected Country, 2009 (Billion dollars and percentage) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 67
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Appendix C
Appendix C: Merchandise Trade: Leading Exporters and Importers, 2009 ($bn and %) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 68
IMPERIAL INSTITUTE OF HIGHER EDUCATION
Appendix D
Appendix D: Leading Exporters and Importers in World Trade In Commercial Services, 2009 (Billion dollars and percentage) [Source: (World Trade Organization, 2010)]
PPEC 140
Master of Business Administration (MBA)
Page | 69