Higher commodity prices allowed for increased exports from developing countries in 2004. Niveen Wahish looks at figures released by the WTO While the escalating oil prices in 2004 were a cause of alarm for the industrial world, they certainly worked well for oil-exporting developing countries. As recent figures of the World Trade 2004 report, issued by the World Trade Organisation (WTO), show, higher oil prices boosted the exports of developing countries, particularly those in the developing regions of the Middle East, Africa and Latin America. Not only oil, but also generally high commodity prices, which increased faster than the prices of manufactured goods in 2004, and the recovery in the trade of office and telecom equipment resulted in a sharp increase in the merchandise exports from developing economies. The share of the developing economies in world merchandise exports was 31 per cent in 2004, the highest level since 1950. Africa's exports grew by an impressive 30 per cent last year due to the commodity price rises, the highest growth in African exports since 1980. This growth in trade has been associated with expanded production, while comparable growth rates are expected for 2005. And with the prices for fuels and metals rising by more than 30 per cent according to the IMF commodity price index, countries with a large share of fuels in their merchandise, such as the Middle East, Africa and the Commonwealth of Independent States (CIS), recorded above-average growth in 2004. "Higher oil and metal prices sharply increased the share of fuels, metals, iron and steel in world merchandise exports, to a new cyclical peak level," the report said. The Middle East, Africa and the CIS member countries are major net exporters of fuels and metals, and their share in world merchandise trade recovered in 2004 due to these price developments. The world economy as a whole grew at four per cent in 2004, the strongest annual growth rate in more than a decade. Africa and the Middle East registered GDP growth of approximately four per cent as well, faster than in the 1990s. Developing Asia and the Commonwealth of Independent States (CIS) countries continued to report the strongest regional GDP growth worldwide at seven per cent and eight per cent respectively. South America recorded GDP growth of six per cent, the highest growth rate since 1986. In the meantime, North America's growth strengthened to 4.3 per cent, exceeding its expansion rate in the last two decades, which averaged slightly above three per cent. Economic activity picked up in Europe and Japan, but growth remained at 2.3 per cent and 2.6 per cent respectively in 2004, which was much weaker than the performance of all other regions. European economic performance was especially poor in the euro area, which recorded GDP growth of only two per cent. Domestic inflation picked up moderately in the course of 2004, under the impact of strengthened economic activity and the increase in world fuel prices. The repercussions of higher oil prices on the domestic level was attenuated in many countries by a currency appreciation vis-�-vis the US dollar, and in some cases by government measures, including price controls for petroleum products sold in local markets. Dollar prices of internationally traded goods increased by 11 per cent in 2004. Prices of fuels and metals recorded a marked increase in the course of 2004, lifting their average annual prices by 31 per cent and 36 per cent respectively. Nominal oil prices reached $55 per barrel in November, a record monthly level. The annual average crude oil price rose to $36 per barrel in 2004, and matched the previous historic peak level of 1980 in nominal terms. Food prices went up by 14 per cent while the average prices of manufactured goods are estimated to have risen by 8.5 per cent in 2004. But WTO economists say the expansion in world trade started to lose momentum in the second half of 2004. The slowdown which began during the second half of 2004 is likely to decelerate the world merchandise trade growth from nine per cent in 2004 to 6.5 per cent in 2005. In 2005, the global economy is projected to follow a more moderate growth path, and expand by three to 3.5 per cent. Higher energy costs worldwide are expected to constrain the global economy.
