WRITTEN QUESTION E-2717/00

by Christopher Huhne (ELDR) to the Commission

(1 September 2000)

Subject: Trade íntensity of GDP growth

Will the Commission please estimate the relationship between trade growth and GDP growth in each of the Member States and indicate whether the advent of the euro has yet had any effect in increasing the trade intensity of GDP growth since its introduction on 1 January 1999?

Answer given by Mr Solbes Mira on behalf of the Commission

(21 September 2000)

The relationship between trade growth and gross domestic product (GDP) growth in Member States varies considerably between Member States and over time. The Commission is sending direct to the Honourable Member and Parliament's Secretariat an annex containing this information. The considerable variation from quarter to quarter and the lack of sufficient long-term data on a monthly or quarterly basis (at best from 1986 to the first quarter of 2001) makes it difficult to identify clear trends for the very recent period.

Bearing in mind that limitation, it seems nevertheless that for those Member States for which time series exist since the mid eighties, some slight trend increase in trade elasticities (ratio of export or import growth to GDP growth) is to be recorded. These elasticities tend to amount on average to around 3 over the past decades, which means that in general trade grows by that factor faster than GDP. Looking at the period from 1995 onwards, as regards exports, Spain, France and Sweden show a particularly high elasticity. For imports this applies to Spain, Italy and the United Kingdom.

This is reflected in the constant rise of the respective shares of exports and imports of goods and services in GDP, from around 25 % for Community exports in 1991 to around 35 % in 1999/2000. However, for this measure there is a considerable variation among Member States, varying (for exports in the 1st quarter of 2000, for those Member States for which quarterly figures exist) from 80,5 % for Belgium to 29,6 % for Italy.

No particular shift in trends could be identified for the period from 1999 onwards, the beginning of the third stage of economic and monetary union, for those Member States being part of the euro area. Equally, the close parallelism between the euro area and the Community as a whole as regards trade elasticities and trade shares has continued to prevail.

The lack of visible effects from the introduction of the euro should not come as a surprise, as the available time span (5 quarters) is still too short to measure the eventual impact, given the mentioned volatility of the underlying figures. The expected effects might materialize with some delay, adding to the above mentioned measurement problem. Some diversion of trade with third countries to intra-euro area trade might have taken place. The aggregate effects on total trade might therefore be small. As the Commission publishes only trade figures for total trade, such trade diversion effects would not easily be discovered (Eurostat's customs trade statistics distinguish between intra-and extra Community trade, but these are only in value terms and do not include trade in services).

Finally the completion of the internal market, with, notably, the abolition of barriers to trade in goods and services and movement of capital, was a major event for the volume and structure of cross-border trade flows of Member States. The adaptation of cross-border trade to that change of regime is still taking place and overlays any other parallel effects on cross-border trade, such as the introduction of the single currency.