COMCEC Trade Outlook 2017
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6. CONCLUSION
World trade in dollar terms declined by 2.9 per cent in 2016 following the sharp decline of 12.5
percent in 2015 thus falling to 16.0 trillion US dollars down from 16.5 trillion US dollars in 2015.
World trade witnessed the weakest growth in volume terms (accounted for changes in prices
and exchange rates) in 2016 since the global crisis. It should also be noted world trade volume
growth has been below pre crisis trend levels.
World trade slowdown in 2016 was attributed to several factors including ongoing weakness in
global economy, falling oil and other commodity prices, and China’s rebalancing of demand. The
stagnation in developing countries imports demand accountedmainly for the weakness inworld
trade in 2016. There are both cyclical and structural factors weighing on world trade. However
structural factors are estimated to have larger effect on recent slowdown in world trade. The
structural changes that contributed to global trade weakness includes changes in the
composition of economic activity away from import-intensive investment, the maturation of
global value chains and slower pace of trade liberalization. The slowing pace of global value
chains was found to be the main structural factor affecting world trade negatively.
China’s growth prospects is crucial in particular as China being ranked first among the major
export markets for OIC countries. China's demand for commodities was also an important
deriver of prices of many commodities besides oil as China emerged as a key importer for many
commodities in the last decade.
Total OIC exports hovered around 2.1 to 2.2 trillion dollars between 2012 and 2014 period.
However total OIC exports fell sharply by 27.7 per cent in 2015. Total OIC exports declined
further by 9.2 per cent in 2016. Thus total OIC exports’ share in world exports further declined
to 8.7 per cent in 2016. On the other hand total OIC imports which continued to increase
modestly over the 2012 and 2014 period, fell by 6.6 per cent in a second consecutive year in
2016 to USD 1.6 trillion. Thus total OIC trade fell to 3.0 trillion dollars in 2016 down from 3.2
trillion dollars in 2015.
Several factors accounted for the decline in total OIC exports in 2016 including the sluggish pace
of world demand growth, downward trend in commodity prices in particular the oil prices, US
dollars appreciation and ongoing political transition in many countries in Middle East.
The share of intra-OIC trade in total trade peaked at 18.4 per cent in 2016. However, there is a
substantial variation amongst the OIC countries in terms of the share of intra-OIC trade to total.
Total OIC exports are highly concentrated. Although the share of mineral fuels, oils and
distillation products in total OIC exports declined in recent years it has still the highest share
with 43.9 percent in 2016. Commodity concentration is even more apparent when countries
examined specifically. Fuels in particular petroleum was the main exported item in many
members ranging between 40 to 98 per cent of total exports. Yet some other member states
heavily depend on specific primary commodities such as metalliferous ores, or agricultural
commodities. Examination of export product diversification using Herfindahl index in the OIC
yields that there a little tendency towards increasing product diversification and there is a wide
variation among OIC countries. Moreover, the product concentration of the OIC countries
exports is above world averages.
Market concentration of OIC exports is also high. Although OIC exports are mainly destined to
developed countries. China alone accounted for 10 per cent of total extra-OIC exports. The high