Looking back at 2010 and looking forward to 2011

As 2010 comes to an end, we look back at a year which is slowly recovering from a global financial meltdown which was the worst in decades.

A report released by WTO, OECD, UNCTAD in March 2010 on the G20 trade and investment measures estimated that world trade had fallen by around 12% in 2009 which was the level in 2006.

A report released by the WTO in November indicated that 2010 saw signs of global trade bouncing back and forecast an increase of 13.5% in volumes from 2009.

The year 2010 was an important year for the developing countries. It was really the year of the developing countries. While the developed countries were severely affected by the global crisis and are yet to recover fully, resulting in huge unemployment levels, the developing countries led the walk back to global recovery. The term “emerging economies” has become a fashionable term to describe some of the developing countries who are among the leaders in global recovery.

Leaders of the developed world saw it fit to woo such countries to assist them in their economic recovery back home and President Obama who visited India recently described India not as an emerging economy, but as having ‘emerged’ and said that the business contracts signed during his visit resulted in about 50,000 jobs being created in the US. This indeed is a reversal of roles from the times when the developing countries depended on the developed countries for job creation.

The year also saw BRIC which is grouping of four of the most important developing countries – Brazil, Russia, India and China – making its presence felt in the world arena in a strong sense. This is a grouping which a few decades ago would not have mattered very much. However, in the present global economic context, BRIC can be an important grouping to reckon with by 2020. These four countries from different corners of the world account for 42% of the world population and one-fourth of the earth’s total area. Between 2010 and 2014, collectively, BRIC economies are expected to account for 60% of the global growth. This trillion dollar cluster’s economies together are said to be already on track to surpass the US economy by 2020.

At their meeting in April this year, they made their presence felt by stating that they want the chiefs of the World Bank and the IMF on merit rather than nationality. By tradition the World Bank chief has been selected by the US and the IMF chief by Europe. They have criticised the ‘legitimacy deficits’ of the World Bank and the IMF and want a ‘substantial shift in voting powers towards emerging markets and developing countries. Developments in this organisation would be interesting in the year to come. 2011 will be a year of the emerging economies .These countries will be the markets of the future and the global leaders.

Expectations for concluding the WTO Doha Round in 2010 did not materialise and now expectations have shifted to 2011for the conclusion of the Doha Round. The Director General of the WTO has said that the success will depend if they are able “to move out of their comfort zones” as that is where they failed previously. Credibility of the multilateral system is at stake if they are unable to conclude the Round in 2011.

Looking back at Sri Lanka in 2010, GSP+ was terminated in the latter half of the year. Hopes of signing the much awaited Comprehensive Economic Partnership Agreement (CEPA) with India did not materialise. However, Sri Lanka signed the SAARC agreement for trade in services, which is a welcome development.

In 2011, Sri Lanka should aggressively try to develop her markets among the emerging economies. Conclusion of the CEPA with India and a similar agreement with Pakistan would be steps in the right direction.

With peace in the country opening up areas which were closed for many decades, new products for exports could be developed. We end this year with the hope that in the area of exports, product diversification will expand and earnings from more exports will increase resulting in a better life for all of us Sri Lankans. Happy New Year.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)