Morgan Stanley Expects Global Trade to Slow; Up Only 4.3% This Year
Jun 26, 2001 - 16:30:11 HKT
Quamnet News Service
Morgan Stanley Dean Witter said its latest trade estimates indicate only a 4.3-percent rise this year following robust growth of nearly 13 percent in world trade in 2000.
In contrast to the downturn in trade the world experienced in the early 1990s, weak import demand in developing nations places them in no position to be the market of last resort, said analyst Joseph Quinlan in a note dated yesterday.
Real domestic demand in key markets such as South Korea, Brazil, Hungary and others is softening, as unemployment levels rise and capital investment plans are scaled back, it said.
Since the Asian crisis, developing nations have become more dependent on industrialized nations, notably the U.S., for export growth, it added. The developing nations' trade balance with industrialized nations swung to a US$48 billion surplus in 1999 from a US$53 billion deficit in 1998. Last year, the surplus hit a record of US$166 billion (approximated). If the surplus does narrow this year, it will most likely be on account of falling exports rather than a rise in imports, it said.
"The bottom line is that this trade recession is uniquely differently from the last one," it said. "With neither the U.S. nor developing nations capable of stepping up imports, the likelihood of staving off a global recession in output and trade is becoming increasingly remote. By the same token, the strains of the early 1990s were partially absorbed by the developing nations. Today's environment, however, is dangerously different since there are no obvious channels to vent the mounting strains on the global economy." |
