G.A.T.T. forecasts only moderate trade rise

Press, 15 March 1978, Page 14

G.A.T.T. forecasts only moderate trade rise

NZPA-Reuter Geneva World commerce grew at a sharply-reduced rate of 4 per cent las year, compared with 11 per cent in 1976, reports the secretariat of the General Agreement on Tariffs and Trade.

Only a moderate rise could be expected this year, the report said. G.A.T.T. is the world’s leading trade forum, it has 83 nations as members, and rules the conduct of more than four-fifths of international commerce. Its report said that there were scattered signs that investors’ and consumers’ confidence had improved in several European countries, including West Germany. In the United States, the rate of economic growth was expected to be only slightly below last year, when the gross national product rose about 5 per cent.

However, the effect of these trends on world trade was unlikely to be pronounced in the first half of 1978, because deceleration of growth in international com-

merce in the second half of 1977 could be reversed only gradually, and governments in recent months had introduced new trade restrictions to protect home industries.

Export earnins of the oilproducing member states of the 13-nation Organisation of Petroleum Exporting Countries were estimated to have risen about 11 per cent in 1977, mainly from higher prices.

Though their imports grew in value at roughly twice the rate of increase in their exports, the combined trade surplus declined only moderately to $53.000M in 1977, from $56,D00M in 1976.

Although growth of volume decelerated sharply last year, the value of world trade in dollar terms increased 13 per cent — about the same as in 1977 — to sAustlooo billion. The difference between the growth in value and in volume represented a change in United States dollar unit values of world trade, which increased by almost 9 per cent in 1977 against 2 per

cent in 1976. This statistical change was due to basic changes in the domestic prices of goods entering world trade, and in the exchange rate of the United States dollar, in which world trade is measured.

After a recovery in 1976, economic activity- in industrial countries continued to expand in 1977, but at a slower pace. For the area as a whole, the rate of increase in gross national product in real terms declined from 5.5 per cent in 1976 to 3.5 per cent in 1977. The rate of increase in industrial production dropped from 9 per cent to 4.5 per cent.

Imports by industrial countries increased in volume only 4 to 5 per cent compared with 14 per cent in the preceding year, mainly because of a decline in domestic demand, the GA.T.T. report said. In value terms, the increase in imports was about 12 per cent. The volume of exports of industrial States expanded at about the same rate as imports —■ 4 to 5 per cent — about half as rapidly as in 1976. Their dollar unit value increased 8 to 9 per cent. The aggregate trade deficit (exports fiee on board; imports cost insurance freight) of North America, Japan, and the industrial countries of west Europe, but excluding south Europe, increased to $37,000M compared with $33,D00M in 1976. The aggregate trade deficit of the south European countries —Greece, Portugal, Turkey, Spain, and Yugoslavia — rose to $20,000M from $17,600M in 1976.