Report AIECE Working Group on Foreign Trade

The financial crisis is still spreading and deepening and is making inroads on the real economy.

Wednesday, November 19, 2008

Forecasting is always “work in progress” but the exceptional situation today makes it feel like shooting at a moving target from a ship on the high seas. The forecasts of the Working Group were prepared at the beginning of October, starting off from data supplied by member institutes, prepared somewhere in the third quarter. We already took the liberty during our meeting to make bigger than usual adjustments to these national trade forecasts, to get closer to the rapidly deteriorating situation in the world economy. But it is clear that our efforts fell short of what we are experiencing today.

Given the uncertainties, the Working Group did not think it opportune to prepare a completely new detailed trade forecast. Instead we present the data prepared early October, which already incorporate strong downward shifts in the overall outlook, but give ample attention to the current trends and risks. We also provide a model simulation estimating the possible effects on trade variables of the rapidly declining short-term growth outlook for the world economy, the weaker euro and the lower oil and other commodity prices. In the original forecast, world trade growth decelerated from 7.4% in 2007 via 5.0% in 2008 to 2.5% next year.
The simulation suggests that world trade levels might actually decline in 2009.

More on this topic

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Commodity prices, financial crisis, regional inflation

December 2008

Outlook Report December 2008 from the Executive Secretariat of the Central American Monetary Policy.

The disruption of prices in the international market for commodities: petroleum, steel, copper, and basic food, and especially, the recent problems with the US financial system and other countries and regions in the world that are affecting employment and other economic variables, are two of the situations that have significant implications for the region.

Fitch: Severe Global Recession Expected in 2009

November 2008

Fitch Ratings predicts that the world's major advanced economies will next year experience the steepest decline in GDP since World War II.

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