World commercial services trade recorded a strong expansion in following two years of weak-to-negative growth. This is illustrated by Chart 7, which shows growth in the dollar value of commercial services exports since by major services categories. Detailed breakdowns of commercial services trade by region and country are shown in Appendix Tables 2, 5 and 6. There were no changes in rank among the top 5 exporters of commercial services when EU member countries are counted separately, whereas the United Kingdom rose to 5th place among importers from 6th previously.
There were no changes in rank on either the export or import side with the EU treated as a single entity and intra-EU trade excluded. The United Arab Emirates placed much higher in the global export rankings 12th in , excluding intra-EU trade than in previous press releases, but this was due to data revisions rather than increased exports. UAE imports were also considerably larger. As a result, ranks of countries in commercial services trade are not fully comparable to previous years. Some leading and coincident indicators of merchandise trade continued to point in a generally positive direction in the first quarter of while others have taken a negative turn.
An index of container port throughput was close to its highest level ever recorded in February Chart 8 , suggesting strong trade growth. However, a measure of global export orders derived from purchasing managers' indices dipped in March, falling to A value above 50 still indicates expansion, but the recent weakening could be attributed to rising anti-trade rhetoric Chart 9. Balanced against these broadly positive signs is a rising tide of anti-trade sentiment and the increased willingness of governments to employ restrictive trade measures.
Recent measures have been applied to widely traded goods supplied by a large number of countries, with counter actions promised if these go into effect. An escalating cycle of retaliation may yet be avoided if negotiations manage to diffuse tensions, but this is not guaranteed.
CHALLENGES OF ECONOMIC GLOBALIZATION
As always, the WTO stands ready to help members reach mutually beneficial outcomes. Note: Values greater than 50 indicate expansion while values less than 50 denote contraction. Source: IHS Markit. Another major risk is an unanticipated hike in inflation in one or more countries, which could cause monetary authorities to raise interest rates precipitously and cause economic growth to slow, with negative consequences for trade. The United States Federal Reserve is already in the process of raising interest rates closer to historical norms while the European Central Bank is moving closer to phasing out its own stimulus measures.
Economic forecasters generally expect monetary authorities to manage these challenges successfully, but with less room to manoeuvre some financial volatility could come to the fore if conditions change. The increased level of policy uncertainty is illustrated by Chart 10, which shows an index based on the frequency of phrases linked to economic uncertainty in press accounts. Assuming current forecasts for GDP growth come to pass, the WTO expects world merchandise trade volumes to increase by 4.
Developed countries should also see fairly strong growth on both the export side 3. In global trade growth is projected to moderate to 4. However, economic activity would also be expected to take a hit from escalating trade restrictions, which could result in more negative scenarios being realized. As a result, its trade in services statistics were revised downward starting in on both the credit and the debit side.
Quarterly data not available. Note: Preliminary estimates based on quarterly statistics. Figures for a number of countries and territories have been estimated by the Secretariat. Download this press release pdf format, 22 pages, KB. Audio: Press Conference.
Problems viewing this page? If so, please contact webmaster wto. Faster trade expansion is being driven by stronger economic growth across regions, led by increased investment and fiscal expansion. Trade growth in is likely to fall within a range from 3.
Trade growth should moderate to 4. The ratio of trade growth to GDP growth should remain at 1. Risks are centred on trade and monetary policy, where missteps could undermine economic growth and confidence. Without these regulatory reforms, both the risk of increasing public dissatisfaction and the hollowing-out of productive enterprises will occur.
Both Japan and the entire world will greatly benefit from promoting the trend of globalization. However, globalization is vulnerable to protectionism. As such, Japan will affirmatively maintain the free trading system through continuous endeavors in multinational negotiations. The international harmonization of standards will promote growth in production and trade volume and benefit both producers and consumers. Japan will continuously promote the harmony of standards on a multinational basis. Whether a competitive business environment is realized or not, it is more important that the regulatory system work well.
As long as it does, ad hoc intervention through trade policy by some nations to equalize import share will never be justified from the viewpoint of economic efficiency. Regional integration is increasing recently and in some cases risks violating such basic WTO rules as most favored nation MFN status. However, such movements will be seen as the complementarity to the WTO in cases where trade-related liberalization is being pursued and where domestic regulatory reforms and macroeconomic policy is being coordinated.
Japan will work to prevent the spread of closed regionalism while affirmatively promoting open regionalism through such forums as APEC.
Japan's assistance for economic reform and the growth of member countries through open regional integration will inhibit protectionism and promote globalization under the proper macroeconomic policy coordination. The world economy will grow 3. OECD counties will grow about 2. The recent turmoil incurred by the currency and financial crisis in Asian regions is taken into account. Historical data from to suggests that the financial crisis will reduce annual growth by 0. Overall world trade volume will expand 3. Additionally, trade liberalization measures scheduled to-date will push it up 0.
These figures are considered conservative as a continuous expansion of FDI foreign direct investment should induce further intra-industry trade expansion. Looking at the visions in the year , the United States will have to manage its domestic income disparity problem, while the EU will have to proceed with domestic regulatory reform of member countries to assure the success of monetary unification. ASEAN and Asian NIEs, currently struggling with the economic turmoil incurred by the financial and currency crisis, must restore macroeconomic stability and reform financial regulation to suit the global environment.
WORLD TRADE ORGANIZATION
Since the s, the pace of globalization has picked up, spurred on by lower telecommunications costs and fewer differences in national systems. From the economic viewpoint, globalization is defined as "the pursuit of efficiency by various economic agents on a global scale. The spread of globalization is symbolized by expanded trade in goods and services, the transfer of capital and multinational corporations. In other words, consumers now have more opportunities to obtain information about products and buy all sorts of goods; capital moves back and forth among liberalized capital markets in search of profit-generating opportunities; and corporations aim for economic efficiency in their activities.
The flow of people, on the other hand, except for a minority of persons engaged in international, specialized work, takes place on a much smaller scale, held back by limitations on labor migration and differences in language, culture and customs. Nevertheless, because of alterations in the structure of comparative advantage, the industrial and employment structures in all countries are changing simultaneously and increasing friction-generating unemployment caused by the movement of labor among industries.
In other words, even though many people have lived where they always have, globalization is altering consumer lifestyles, employment and business conditions. The fact that NIEs in Southeast Asia have grown and become industrialized also shows that the world economy, in which globalization plays an ever-larger role, has entered a new phase. The growing links between the world market economies and planned economies -- in other words, the fact that Russia and the countries of Eastern Europe are transiting to market economies and that China is now a market economy participant -- are having a major impact on international political and economic relations.
Bearing these developments in mind, the Working Group on Globalization has analyzed the impact of trade and of labor and capital movements on Japan's economy and the effects of harmonizing economic and legal systems and various practices, based on the fundamental viewpoint of establishing a fair and transparent market system. The Working Group also drew a specific picture of the global economy in and discussed qualitative issues to supplement the images of the respective countries' and regions' economies.
In Search of New Development Finance
The impact of globalization on the Japanese economy, harmonization of systems in a globalized environment, the global economy in and the issues involved, and the issues facing Japan will be discussed in the following sections. Figure 1 summarizes the issues that will be discussed. In this section, the impact of globalization on the Japanese economy will be analyzed from four perspectives. The first is trade and employment, and the second is international labor migration, and the role of multinationals in employment.
Shifting perspective slightly, the third and fourth points will discuss the effects of globalization on economic policy. Specifically, the third point will analyze the issue of strategic trade policies since the s. For example, is active protection of domestic industry effective; and, is this a positive development from the macroeconomic viewpoint too? The fourth point concerns the relationship between local economies and globalization. The lowering of national borders resulting from globalization is making the cross-border movement of factors less expensive, and this liberalization is providing opportunities for agglomeration that is inherent in economics.
For example, when artificial boundaries separate countries, as in Europe, it is easy to see that natural cross-border trade helps boost resource efficiency. Increasing globalization is encouraging a new view of economic principles like enterprise location and so on, shifting the focus from national economies to a global viewpoint. The impact of this aspect of globalization on Japan's regional economies will be discussed in this section. The globalization of goods has an impact on the economy, and on employment in particular.
It is important to look back at the experience of the United States and Europe, which felt the effects of globalization first, for appropriate prescriptions to the various problems that could affect the Japanese economy. Since the s, the United States and Europe have been importing more and more industrial goods from developing countries. At the same time, there was a growing disparity in wages among American workers, and unemployment was rising in Europe.
This provoked the argument that expanded trade with developing countries where labor was cheap was replacing domestic production and causing unemployment and labor problems. The view that expanded imports have a negative impact on domestic employment and wages by necessitating employment adjustment, mainly in the manufacturing sector, has encouraged demand for protectionist trade policies, urged on mainly by political forces linked to manufacturers. By examining past research, findings on the extent to which employment adjustment in the United States and Europe was necessitated by trade, the following message is clear.
As the foregoing shows, there are opposing views as to the factors involved between trade and changes in the domestic economy. Whatever the cause, employment adjustment is desirable from the macroeconomic perspective of optimum use of resources over the medium and long term. An accumulation of wealth changes the combination of goods which households can afford to buy and the structure of comparative advantage in industry, promoting redistribution of labor among industries.