IMF Revises Upward World Trade Outlook

The world trade outlook is improving significantly for 2010 and 2011, according to the International Monetary Fund.

The IMF in its latest World Economic Outlook, released this week for its annual membership meetings, estimated the volume of global trade in goods and services will grow 11.4 percent this year, after an 11 percent plunge in 2009 and slow growth of just 2.9 percent for all of 2008. In other words, growth this year in commerce between nations is now expected to outpace last year's downturn.

That 2010 estimate is up a full 2.4 percentage points from the IMF's July report, when it expected trade to grow 9 percent this year. The agency also lifted its trade forecast for 2011 to grow another 7 percent over 2010 levels; in July it estimated 2011 trade would increase 6.3 percent.

By The Numbers: U.S. Trade.

But the new IMF estimate is also the latest in a series of upward revisions by the multinational economic agency, as trade flows throughout 2010 have continued to improve much more than expected.

At the start of this year, the IMF initially thought the recession pushed trade down even further during 2009, to a 12.3 percent decline. At that point it projected that 2010 global imports and exports would rebound by just 5.8 percent, but thought 2011 would show more strength with a 6.3 percent increase in trade.

In April, when the agency typically publishes a large semi-annual update to its WEO report, the IMF upgraded its 2010 trade forecast to expect a 7 percent gain this year but projected a bit slower 2011 increase of 6.1 percent.

However, trade flows since then have regularly outpaced expectations of economists as well as freight industry specialists, so the IMF upgraded its forecast again in July and now in October. At times growth was so brisk that ship lines and suppliers of intermodal containers had to add more capacity to ease emerging bottlenecks and equipment constraints.

The latest upward forecast revisions are also in line with evidence from North American rail intermodal trends. Typically, more than half of rail hauls of containers and trailers is made up of marine container loads that are overwhelmingly dominated by imports of consumer goods, so the trade portion often drives total intermodal numbers.