2
the developing countries are concerned, licences can become an important form of aid to help themselves-- aid that does not affect their political and economic self-reliance and meets their desire for independence and self-determination. The combination of state-aid for development and the private granting of licences in the way it has been shown would be a workable instrument of development policymall the more so as many developing countries have already realised that know-how is as important as capital. World Business Trends Department [or Business Trends Research, The Hamburg Institute [or International Economics Sluggish Trend in World Trade The foreign trade turnovers of all countries (excluding the East- bloc states) adjusted for seasonal variations did not completely main- tain the level reached at the beginning of the year. As com- pared to the previous year's cor- responding value the 1967 growth rate should at best amount to half of that in 1966 (+ 9.8 per cent}. Although it reached almost 7 per cent in the first half year, in the third quarter it came to only 1 per cent according to data hitherto avail.able. Since the temporarily deferred deliveries after the block- ing of the Suez Canal should have been made up to a large extent by September, it is quite obvious that in many economies the cyclical recession of demand had more than proportion, al effects on supplies from abroad. The cyclical stagnation or even contraction of demand for imports during 1967 was a worldwide phenomenon applying to most in- dustrial as well as raw material producing countries. There were only a few exceptions worth mentioning, among them Japan a.s the most important one. From January to September this coun- try's imports surpassed constantly the previous year's corresponding level by 22.5 per cent. In Western Europe, too, some countries, i.e. Italy and Norway, had a high in- crease of imports, but on the whole imports slowed down conspicu- ously. The growth rate of imports, which in 1966 still amounted to 8.2 per cent, declined to 3.5 per cent in the first half of 1967 and to only 0.8 per cent in the third quarter. The North American im- port increase declined even more distinctly (from 18.7 per cent to 9.6 per cent and 1.3 per cent). Here the interruption of growth at the beginning of the year led to a considerable relaxation of the supply-demand-ratio, that still has its ,after-effects during the present revival of business activity. Since the contraction of demand occurred in most of the major industrial countries, trade between ,them was also considerably in- volved. Formerly, when a cyclical recession was more limited, this trade had still been stimul,ated by the differentiation between coun- tries with a strong and those with ,a weak expansion and a corre- spondingly differing utilisation of production factors. Characteristic of this is the development in Western Europe, where---starting ,above all from the Federal Re- public of Germany--the internal exchange of goods reflected the recessive influences. The West European countries' export values, that in 1966 rose by 9.2 per cent and in the first half of 1967 still increased by 8.0 per cent, in the third qu.arter surpassed the pre- vious year's corresponding value by 2.1 per cent only. Simultane- ously and in ~ similar way the growth rate of North American ex- ports declined from 12.2 per cent to 8.9 per cent and 1.9 per cent. Again it was Japan, whose exports kept rising by about 9 per cent (1966:15.7 per cent), that asserted itself best. Although the interruption of the industrial countries' export ex- pansion was a rem.arkable in- dication of the distribution and force of the cyclical tendencies of contraction in the world econ- omy, the raw material countries were hit most. Their export pro- ceeds, which in 1966 rose by more than 7 per cent still, according to data supplied by the International Monetary Fund already in the first half of 1967 increased by 2 per cent only, and in the third quarter obviously lagged behind the pre- vious year's corresponding value. The ,developed raw material pro- ducing countries, i.e. Australia, New Zealand and South Africa, came off quite well (from January to September, 1967: + 8.5 per cent), while the developing coun- tries' exports on the whole were so much involved by the worsened sales chances in industrial countries that also for the whole of 1967 there will be a decline. First the developing countries showed comparatively slight re- actions to the reduction of their exports proceeds, but for several months already they reacted rather heavily by restricting their demand for the industrial nations' products. The growth rate of their imports declined from .almost 8 per cent in 1966 to about 6 per cent in the first half of 1967, while thereupon the previous year's corresponding values were obviously not even reached anymore. The scissor- movement between exports and imports occurring in the middle of the year threatened to double the developing countries' balance of trade deficit to more than $ 4,000 million (fob values} in 1967. INTERECONOMICS, No. 1, 1968 31

Sluggish trend in world trade

  • View
    212

  • Download
    0

Embed Size (px)

Citation preview

the developing countr ies are concerned, l icences can become an impor tan t form of aid to help t h e m s e l v e s - - aid tha t does not affect thei r poli t ical and economic self-rel iance and meets the i r desire for independence and self-determination. The combinat ion of state-aid

for deve lopment and the pr iva te grant ing of l icences in the way it has been shown would be a workab le ins t rument of deve lopment po l i cymal l the more so as many developing countr ies have a l ready real ised that know-how is as impor tant as capital.

World Business Trends

Department [or Business Trends Research, The Hamburg Institute [or International Economics

Sluggish Trend in World Trade

The fore ign t rade t u rnove r s of all count r ies (excluding the East- bloc states) ad jus ted for seasona l va r i a t ions d id not comple te ly main- tain the leve l reached at the beg inn ing of the year . As com- pared to the p rev ious yea r ' s cor- r esponding va lue the 1967 g rowth rate should a t bes t amount to half of tha t in 1966 ( + 9.8 pe r cent}. A l though it reached a lmost 7 per cent in the first half year , in the th i rd qua r t e r it came to on ly 1 per cent accord ing to da ta h i the r to avail.able. Since the t empora r i ly deferred de l iver ies a f te r the block- ing of the Suez Cana l shou ld h a v e been made up to a large ex ten t b y September , it is qui te obvious tha t in m a n y economies the cycl ical recess ion of d e m a n d had more than proportion, al effects on suppl ies from abroad.

The cycl ical s t agna t ion or even con t rac t ion of demand for imports dur ing 1967 was a wor ldwide p h e n o m e n o n app ly ing to most in- dustr ia l as well as raw mate r ia l p roduc ing countr ies . There were on ly a few except ions wor th ment ioning , among them J a p a n a.s the mos t impor tan t one. From J a n u a r y to Sep tember this coun- t ry 's imports su rpassed cons tan t ly the p rev ious yea r ' s co r responding level by 22.5 pe r cent. In W e s t e r n

Europe, too, some countr ies , i.e.

I ta ly and Norway, had a h igh in-

crease of imports, but on the whole

imports s lowed d o w n conspicu-

ously. The growth ra te of imports,

which in 1966 still amoun ted to

8.2 per cent, decl ined to 3.5 pe r

cent in the first half of 1967 and

to on ly 0.8 per cen t in the th i rd quar ter . The Nor th Amer i can im- por t inc rease dec l ined e v e n m o r e

dis t inc t ly (from 18.7 pe r cent to 9.6 per cent and 1.3 pe r cent). Here the in t e r rup t ion of g rowth at the beg inn ing of the yea r led to a cons iderab le re laxa t ion of the supply-demand-ra t io , t ha t still has its ,after-effects du r ing the p resen t r ev iva l of bus iness act ivi ty.

Since the con t r ac t ion of demand occur red in most of the ma jo r indus t r ia l countr ies , t r ade b e t w e e n ,them was also cons ide rab ly in- volved. Formerly , w h e n a cycl ical recess ion was more limited, this t rade had still been stimul,ated b y the d i f fe ren t i a t ion b e t w e e n coun- t r ies wi th a s t rong and those wi th ,a w e a k expans ion and a corre- spond ing ly di f fer ing u t i l i sa t ion of p roduc t ion factors. Charac te r i s t i c of this is the d e v e l o p m e n t in W e s t e r n Europe, where- - - s ta r t ing ,above all from the Federa l Re- publ ic of G e r m a n y - - t h e in te rna l exchange of goods ref lected the recess ive inf luences. The Wes t European count r ies ' expor t values , t ha t in 1966 rose b y 9.2 per cent and in the first half of 1967 still i nc reased b y 8.0 pe r cent, in the th i rd qu.arter su rpassed the pre- v ious yea r ' s co r respond ing va lue

b y 2.1 pe r cent only. S imul tane-

ous ly and in ~ s imilar way the

g rowth ra te of Nor th A m e r i c a n ex- por ts decl ined from 12.2 per cent

to 8.9 pe r cen t and 1.9 pe r cent.

Aga in it was Japan , whose expor ts

kep t r i s ing b y abou t 9 pe r cen t

(1966:15.7 pe r cent), tha t asse r ted itself best.

A l though the in te r rup t ion of the indus t r ia l countr ies ' expor t ex- pans ion was a rem.arkable in- d ica t ion of the d i s t r ibu t ion and force of the cycl ica l t endenc ies of con t rac t ion in the wor ld econ- omy, the raw mater ia l count r ies were hi t most. The i r expor t pro- ceeds, which in 1966 rose by more than 7 pe r cent still, accord ing to data suppl ied by the In t e rna t iona l M o n e t a r y Fund a l r eady in the first half of 1967 inc reased b y 2 per cen t only, and in the th i rd qua r t e r obv ious ly lagged beh ind the pre- v ious yea r ' s co r re spond ing value. The ,developed raw mate r ia l pro- duc ing countr ies , i.e. Aus t ra l ia , New Zea land and South Africa, came off qui te wel l (from J a n u a r y to September , 1967: + 8.5 per cent), whi le the deve lop ing coun- tr ies ' expor ts on the whole were so much i n v o l v e d b y the worsened sales chances in indus t r ia l count r ies t ha t also for the whole of 1967 the re will be a decline.

Firs t t he deve lop ing count r ies showed compara t i ve ly s l ight re- ac t ions to the reduc t ion of the i r expor t s proceeds , bu t for seve ra l months a l r eady they reac ted r a the r heav i l y by res t r i c t ing the i r demand for the indus t r ia l na t ions ' products . The g rowth ra te of the i r impor ts decl ined from .almost 8 pe r cent in 1966 to abou t 6 per cent in the first ha l f of 1967, whi le t h e r e u p o n the p rev ious yea r ' s co r re spond ing va lues we re obv ious ly not e v e n reached anymore . The scissor- m o v e m e n t be tween expor ts and imports occurr ing in the middle of

the yea r t h r e a t e n e d to double the

deve lop ing count r ies ' b a l ance of

t rade defici t to more t han $ 4,000 mil l ion (fob values} in 1967.

INTERECONOMICS, No. 1, 1968 31

Index Numbers of World Market Prices of Foodstuffs and Industrial Raw Mater ia ls

Index and commodi ty group

H W W A - I n d e x 1 (1952--1966 ffi 1OO}

Foodstuffs .

' Raw mater ia ls other than foodstuffs . . .

Fuels

Raw mater ia ls for consumer g o o d s . ,

Raw mater ia ls for capi ta l goods . . . . .

Reuter ' s Index {18. 9. 1931) = 1OO . . ,

M o o d y ' s I n d e x (31. 12. 1931 = 100) . . ,

1966 t

November

92.4

83.8

96.5

95.6

91.2

lot.5 425.3

369.0

1967

February

92.6

85.0

96.3

95.2

92.6

99.9

432.3

369.1

May

92.6

87.8

94.9

95.0

91.7

96.9

438.8

372.7

Augus t

90.$

83.5

93.9

95.3

89,7

95.2

420.7

367.2

November

94.2

87.9

97.3

96.5 89.4

103,3

456.6

362.8

Nov. 17

93.7

88.2

96,4

96.6

88.3

101.7

445.1

363.1

I Dec. 1

96.0

88.5

99.6

96.6

93.1

107.2

490.5

363.0

Index compiled by the Hamburg Institute

The prospects for another ex- pansion of world trade in 1968 are improving in l ine with a progressing st imulation of demand in the United States and the over- coming of the cycl ical decline in Wes te rn Europe. After in the first phase of r ecovery or consolidation, respect ively, in each case the domestic producers obviously pro- fited most, in the next year inter- national t rade will also reflect increasingly the st imulation of de- mand for industrial products as

Raw Material Markets Further Depress ion of W o o l Prices

In the producer countries, on Jul i I, 1967, the new wool season started with lower prices than at the clos- ing .auctions of the season 1966/67. During the first months of the cur- rent season, prices continued fal- l ing slowly, in September and October, however , they could keep their lower level. Then, in mid- November, there was another sharp price decl ine; in Bradford, prices were only 104 d/lb for 64' wooltops and 62 d/lh for 56' crossbreds. Thus they were 9 per cent and 29 per cent, respect ively, below the pre- ceding year ' s level . So, the price increase to 119 and 77 d/lb0 r e s p e c t i v e l y - d e c i d e d after the de- valuat ion of pound- -has obviously nothing to do with the market situation.

for In te rna t iona l Economics.

well as raw materials. In this con- nect ion it will be decis ive for the less deve loped countries, whether

the speed of expansion in industrial

s ta tes - -and with that the increase

of demand for raw mater ia l s - -wi l l suffice for a recovery of raw

mater ial prices. As there are quite

a few incbieations to this effect, the

developing count r ies - - jus t due to

their restraint in the current y e a r - -

will be able to gradual ly increase

their imports again.

First, a lack in buying interest

became noticeable, .above all with

regard to lower qualities. Due to the bad sales situation for cross-

breds the New Zealand Wool Com- mission, for instance, ~ras obliged

to cut the lower price limit for its

backings from 30 to 191/2 d/lb. But

recent ly also high-quali t iy Austra-

lian Merino kinds were difficult to sell, a l though- -as an impact of

the strong economic boom- -a con-

sicterable demand from Japan, the

main wool buyer, could be noticed

In the current season 1967/68,

world wool production i s - -whi th

3,437 million lb, c leaned- - to grow

by 2 per cent against 1966/67. The higher product ion in Austral ia

(+ 3 per cent), New Zealand

(+ 4 per cent) and South Afr ica (+ 6 per cent) wil l more than

compensate the anticipated lower

yields in Argent ina and the USA.

In 1967/68, the total wool supply

avai lable will even grow by ap-

proximate ly 8 per cent as com-

pared with the previous season,

because due to sales difficulties

producers ' ~stocks t rebled from mid- 1966 to mid-1967 to 330 million lb.

These stocks, however , par t ly con-

sist of wool quali t ies being slow

of sale, so that the price pressure

for high-qual i ty kinds, originating from the wool surplus, will prob- ably be v e r y limited.

In the current season, the re- v iva l of demand will have a price

support ing effect in the wool mar-

kets. In connection with the be- ginning business upswing, in some important processor countries wool consumption, which dur ing the first half of 1967 still showed a decl ine of I0 per cent, meanwhi le should presumably sl ightly increase

again. Moreover , in the next months, processors will rather be incl ined to supplement the i r con-

siderably reduced stocks. However ,

the pound devaluat ion and the result ing restriction measures in Britain, which is one of the greatest wool consumers, will perhaps make processors temporar i ly show a certain reserve.

I N T E R E C O N O M I C $ �9 Monthly Review of International Trade and Development Edited by The Hamburg Institute for International Economics {Hamburgisches Welt-Wirtschafts-Archiv), Director: Prof. Dr. Heinz-Dietrich Ortlieb, and The German Overseas Institute (Deutsches Obersee-lnstitut), President: Prof. Dr. Dr. h. c. Andreas Pred6hL Editorial Office: Dietrich Kebschull (Chief Editor), Wolfgang Reisener, Hubert H6ping; published by Verlag Weltarchiv GmbH., Address: Eppendorfer Landstrafie 106, 2 Hamburg 20. Advertising Representative: Dr. Hans Klemen. Printed by Otto Schwitzke, 2 Hamburg 70.

Annual rate of subscription DM 48,-- {US-$ 12,--). Copyright by Verlag Weltarchiv GmbH.

32 INTERECONOMICS, No. l , 1968