Trade Working Group 5thMeetingMarch 26, 2015

Ankara, Turkey

Making Cooperation Work

For Building an Interdependent Islamic World

COMCEC Trade OUTLOOK

2014

COMCEC STRATEGY

OUTLINE

• Recent Trends in Trade Between OIC

Member States and the World

• Recent Trends in Intra-OIC Trade

• Effects of Steep Fall in Oil Prices on OIC

Countries(MENAP Region)

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TRADE BETWEEN OIC and the

WORLD

1

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Total OIC exports fell by 3.1 per cent in 2013

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Source: SESRIC

Main Factors Accounting For The Weakness Of Total OIC Exports In 2013

• The slow pace of world demand

growth

• Falling commodity prices

• Ongoing political instability in the Middle East and oil supply disruptions

 1

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World trade growth remained sluggish in 2013

1

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Source: WTO Database

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Falling Commodity Prices in 2013

Source: IMF Database

Prices of Selected Commodities Exported by the OIC Members

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Source: IMF Database

(2005=100)

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The share of OIC countries in global exports declined to 11.8 per cent in 2013

Source: SESRIC, WTO

Share of OIC countries in global trade increased in value terms but not in volume

terms

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Source: UNCTADSTAT, IMF

Top performers in total OIC exports in 2013

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Source: SESRIC

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High country concentration in total OIC exports

Source: UNCTADSTAT

Table 1: Major Destinations of OIC Exports

Countries 2011 2012 2013 2011 2012 2013

China 224 242 254 11.3 11.8 12.7

Japan 232 246 236 11.7 12.0 11.8

India 178 202 193 9.0 9.8 9.7

United States 199 191 169 10.1 9.3 8.5

Korea, Republic of 146 155 153 7.4 7.6 7.6

Singapore 93 101 99 4.7 4.9 5.0

Italy 96 98 86 4.9 4.8 4.3

France 67 61 63 3.4 3.0 3.2

Thailand 50 55 59 2.5 2.7 3.0

Netherlands 56 59 57 2.8 2.9 2.9

Euro area 384 386 367 19.4 18.8 18.3Total of Top Ten Countries

1,341 1,409 1,370 67.9 68.6 68.4

(Billion $) Share %

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Dominance of mineral fuels and oils in total OIC exports

Source:ITC Trademap

OIC Exports to World - Top 10 Items (2013, Billion $)

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Share of Petroleum in Total Exports, 2013 (%)

Source: UN Comtrade

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Share of Commodities in Total Exports, 2013 (%)

Source: UN Comtrade

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The total OIC imports dominated by the leading exporters in 2013

Source:SESRIC

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Total OIC imports originated mainly from developed countries

Source: UNCTADSTAT

Countries 2011 2012 2013 2011 2012 2013

China 208 236 265 15.2 16.1 17.2

United States 124 129 137 9.0 8.8 8.8

India 86 91 101 6.3 6.2 6.5

Germany 86 91 98 6.3 6.2 6.3

Japan 80 87 79 5.8 6.0 5.1

Singapore 71 73 74 5.2 5.0 4.8

Russian Federation 60 71 70 4.3 4.8 4.5

Korea, Republic of 67 68 69 4.9 4.7 4.4

Italy 60 62 67 4.3 4.2 4.3

France 64 62 66 4.7 4.3 4.3

Euro area 316 328 357 23.0 22.4 23.1Total of Top Ten Countries

907 971 1,024 66.0 66.3 66.3

(Billion $) Share %

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Product diversification of total OIC imports was higher

Source: ITC

(2013, Billion $)

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INTRA-OIC TRADE

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Share of intra-OIC trade peaked at 18.7 per cent in 2013

Source: SESRIC

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Major players in intra OIC trade in 2013

Source:SESRIC

(Billion $)

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Intra-OIC exports concentrated on a few commoditites

Source: ITC Trademap

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20 per cent intra-OIC trade target was surpassed by 30 Member States by 2013

Source:SESRIC

Member States Having the Biggest Intra-OIC Trade

Share (%)

Member States Having the Lowest Intra-OIC Trade Share

(%)

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Source:SESRIC

EFFECTS OF STEEP FALL in OIL

PRICES on OIC MEMBER STATES

(MENAP REGION)

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Oil prices fell from an average of 110 ($/pb) in the last three years to 48($/pb) in January

2015

Source: IMF Commodity Prices Database

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The steep decline in oil prices have been driven by both supply and demand factors along with the effects of monetary policies

ON THE SUPPLY SIDE

-Higher than-expected supply, particularly from the United States-OPEC’s policy shift to maintain production and thus the market share

ON THE DEMAND SIDE :

Weakening Oil Demand Especially from China, Japan and the Euro Area

EFFECTS OF THE MONETARY POLICIESReal interest rates U.S. dollar appreciation

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Growth is expected to weaken in most countries except U.S in 2015

Figure: Real GDP Growth EstimationsWorld US Euro Area Emerging Markets China Russia

Total Oil Exporters Oil Importers2014 3.3 2.4 0.9 4.4 7.4 0.6 2.8 2.7 3.0

2015 3.5 3.6 1.2 4.3 6.8 -3.0 3.3 3 3.9

Revision from Fall 2014 IMF Outlook

-0.3 0.5 -0.2 -0.6 -0.3 -3.5 -0.6 -0.9 0.0

2016 3.7 3.3 1.5 4.7 6.3 -1.0 3.9 3.7 4.5

Revision from Fall 2014 IMF Outlook

-0.3 0.5 -0.2 -0.6 -0.3 -2.5 -0.5 -0.9 0.2

Source: IMF WEO Update January 2015Note: MENAP Oil Exporters include :Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, UAE and Yemen MENAP Oil Importers include :Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauitania, Morocco, Pakistan, Sudan, Syria and Tunisia.

Middle East and Nort Africa

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There is an inverse relation between US dollar effective exchange rate and the oil prices

Source:FED,IMF

Figure: US Dollar Effective Exchange Rates versus Brent Oil Prices

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Kuwait, Qatar, Iraq, Oman, Libya, and Saudi Arabia are expected to be the most affected countries from the

steep decline in oil prices

Source:IMF Regional Economic Outlook 2015 January Update

Figure: External Loss Estimates from Lower Oil Prices, 2015

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Most Oil Exporters need oil prices well above 57 dollars to balance their budgets

Source: IMF Regional Economic Outlook, 2015 January Update

Figure: Fiscal Breakeven Oil Prices (U.S. Dollars per barrel)

2015 oil price

estimate

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Sharp falls in oil prices are expected to lead to significant declines both in the fiscal balances and external balances in

the MENAP region

Source: IMF Regional Economic Outlook, 2015 January UpdateNote: Figures for 2015 and 2016 are estimates.Note: MENAP Oil Exporters include :Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, UAE and Yemen MENAP Oil Importers include :Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauitania, Morocco, Pakistan, Sudan, Syria and

Tunisia.

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While Saudi Arabia and the Gulf states having significant reserves can sustain a lower oil price, Algeria, Iran, Iraq and

Yemen are more vulnerable

Source: IMF Regional Economic Outlook, 2015 January Update

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Oil exporters need to diversify exports to reduce vulnerabilities due to oil price swings

• Oil prices is expected to be volatile on the short term

• Given the negative effects of oil price swings, Oil exporters will need to further diversify their economies

2013 2014 2015 2016 2017 2018 2019 2020 2021

Crude oil, avg, spot $/ bbl 104.1 96.2 53.2 56.9 60.8 65.0 69.4 74.1 79.2

Source: : World Bank Commodity Markets Outlook, January 2015

Trade Working Group Meeting

Thank You

March 26 th, 2015Ankara, Turkey

Making Cooperation Work

For Building an Interdependent Islamic WorldCOMCEC STRATEGY