November 16, 2006

Report AIECE Working Group on Foreign Trade - Autumn 2006

Annual production growth in the world economy exceeded 4½% for four years in a row and is expected to continue to do so in 2007. However, growth next year will be lower than in 2006.

This is by far the strongest run since the early seventies and is above all due to the staggering performance of the emerging markets. World trade growth over the past four years has averaged 8½% and is forecast to fall back only slightly to 7½% in 2007, still above the potential rate of growth.

Strong demand has triggered spectacular price increases for raw materials and energy, pushing up world inflation above the comfort zone of the monetary authorities. The price hike of primary commodities seems to have peaked, partly as a consequence of reduced demand and increased supply for these goods and partly in reaction to the expected overall cooling of the world economy.

We project a decline of the oil price to $ 60 per barrel in 2007, from $ 66 per barrel in 2006. External imbalances increased further in 2006, and the trade deficit of the United States is expected to remain high in 2007, undermining the stability of the US dollar in the long run.


Gerard van Welzenis Read more

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