1. World Trade in 2009 and 2010 Report submitted to the AIECE Autumn General Meeting Brussels, 4th-5th November 2009 By Alain Henriot

2. - 2 1. Overview of the world economy and general assumptions 2. Imports and domestic demand 3. Exports and price competitiveness 4. Trade balances Content

3. - 3 Financial and raw materials markets have given an early sign of the rebound

4. - 4 Raw material and energy prices have already strongly recovered

5. - 5 World economy fell into recession in 2008Q4 and 2009Q1 before registering a positive growth in 2009Q2, which should have been strengthened in 2009Q3

6. - 6 World industrial production back to previous trend (but a huge gap in terms of level)

7. - 7 Most recent figures show a pick up in world trade during last summer * (Sept. est.)

8. - 8 However, the use of « soft » data (here world PMI export order books) can be a bit misleading in the current context regarding the measure of the intensity of the rebound

9. - 9 The gap between the current level of world trade and the pre-crisis level remains huge…

10. - 10 … the consequence of an historical drop in trade flows World trade: an historical perspective

11. - 11 World trade forecast: a strong rebound followed by a moderate growth (+7.4% in 2010 after -13.5% in 2009)

12. - 12 Turning points of world trade and industrial production business cycles are very similar Growth cycles of world imports and world industrial production

13. - 13 1. Overview of world economy and general assumptions 2. Imports and domestic demand 3. Exports and price competitiveness 4. Trade balances

14. - 14 First signals of a recovery were observed in emerging countries but no decoupling Import levels in volume terms

15. - 15 China played a leading role here, leading other Asian countries China: imports by main suppliers

16. - 16 The situation in other emerging countries remain heterogeneous regarding imports dynamism Import levels in volume terms

17. - 17 We expect only a moderate growth of developed countries imports in 2010. No further gains of terms of trade in 2010 (transfers in 2009 of about 1% of GDP), but no inflationary pressure. Import levels in volume terms

18. - 18 1. Overview of world economy and general assumptions 2. Imports and domestic demand 3. Exports and price competitiveness 4. Trade balances

19. - 19 Weakness of the dollar might slow the recovery in the Euro area Price competitiveness: national export prices/competitors in a common currency

20. - 20 Germany and Japan especially hit by the contraction of the sales of equipment goods Value of exports (7 months 2009/7 months 2008, percentage change)

21. - 21 1. Overview of world economy and general assumptions 2. Imports and domestic demand 3. Exports and price competitiveness 4. Trade balances

22. - 22 Main trade imbalances have not been fully offset by the crisis Trade balance

23. - 23 Downside risks . Would Europe and the U.S. find enough support from their internal demand to keep the global recovery continuing?. Overheating in China might trigger a double dip late 2010. Global imbalances raises a risk on the exchange rate system (crash of the dollar). As a consequence of trade deficits and high unemployment, the U.S. and Europe can be attracted by protectionist measures Some risks of the forecast

24. - 24 Upside risks. The catching up process (huge output gap) might imply a quicker and longer economic growth of activity and trade than expected. Emerging countries could take the lead of world trade growth to satisfy internal needs Some risks of the forecast