THE FANTASTIC Recession and the fantastic trade collapse
This sharp economic depression worldwide has resulted in an immense contraction in international trade.
- African export volume growth is likely to decrease to 4% in ’09 2009, from a buoyant rate of 11% in 2008, translating right into a 45% loss in export value. 1
- The largest slump is for middle-income countries, as their exports depend heavily on commodities (e.g. oil and gold and silver coins) whose prices and demand has been severely hit; their manufactures exports also have suffered.
- Oil and gold and silver coins were affected mainly by a slump in global commodity prices, while manufactures suffered because of contraction popular as the true sector in key markets shrunk.
- Low-income countries show some resilience, due to the fact their exports are in “soft” commodities – such as for example tea, coffee, etc. – which didn’t experience a drastic decline in prices or demand on the global market.
This chapter discusses the trade situation in Africa in key global markets and the impact of the global overall economy on different income groups and sectors. Furthermore to advertise access issues, the paper highlights the need for initiatives such as for example “Aid for Trade” in assisting African countries realize the entire gains from trade liberalization.
Trade collapse amid the financial meltdown in major markets
The slowdown in major trading partners, in conjunction with Africa’s undiversified exports has severely affected the continent’s trade. That is exemplified by the drastic fall in exports to the united states, which fell by a lot more than 50% between August 2008 and August 2009, from $8,525 million to $4,017 million (Figure 1).