AND O UTLOOK FOR LDC S
C. Current account and international trade
1. C
URRENT ACCOUNT BALANCE3In 2015 the LDCs as a group registered a record current account deficit of
$68.6 billion, a strong increase of one third over 2014 (figure Intro.2). This stands in contrast with ODCs, all developing countries and developed countries, which as groups registered current account surpluses.
Island LDCs were the only LDC subgroup that experienced a current account surplus in 2015, albeit representing a decrease of 68 per cent compared to their 2014 surplus. The current account deficit of the African LDCs and Haiti amounted to $55.3 billion, an increase of 22.1 per cent compared with 2014.
The Asian LDCs registered a current account deficit of $13.8 billion, representing a near doubling vis-à-vis the deficit of 2014.
These aggregate figures must be interpreted with caution, however. All African LDCs recorded current account deficits in 2015, but among island LDCs Kiribati and Timor-Leste alone accounted for the current account surplus of the island LDC grouping. In Kiribati, there was an increase in revenues from fishing licences on the services export side,4 which also contributed to economic growth The fall in primary commodity prices
particularly affected African LDCs.
LDCs' per capita growth slowed to 1.5 per cent in 2015.
GDP per capita was below $500 in nine LDCs in 2015, and above
$2,900 in three.
LDCs' total current account deficit rose by one third in 2015, to a record level of $68.6 billion ...
and rising public revenues, while in Timor-Leste a modest growth in exports of oil and gas was accompanied by a slight fall in services exports. Among Asian LDCs, Afghanistan and Nepal had current account surpluses in 2015, partly as a result of a weakening of import demand in both countries.
Falling commodity prices adversely affected the export earnings mainly of primary-commodity-dependent African LDCs. Mozambique had the highest current account deficit as a share of GDP in 2015 at 41.3 per cent (figure Intro.3), while Kiribati at the other end of the scale had the largest current account surplus as a share of GDP at 45.7 per cent. Depressed external demand in 2015, reflecting weak economic growth among both developed and developing economies, contributed to the persistent current account deficits of many LDCs, as export demand in LDCs was stymied by worldwide conditions, while imports remained buoyant in the face of persistent production constraints and narrow trade bases. The current account deficits of LDCs were also fuelled by the appreciation of the dollar on world markets.
2. T
RADE IN GOODS AND SERVICES5Global trade growth slowed down to a five-year low in 2015 according to estimates by UNCTAD and the World Trade Organization (UNCTAD and WTO, 2016). They show that, measured in current dollars, global merchandise exports plummeted by 13 per cent in 2015. Services exports declined by 6 per cent.
Developed and developing economies appeared similarly affected by the decline of merchandise exports in 2015, with falls of 12 per cent and 13 per cent, respectively. The sharpest reductions were experienced by the principal petroleum exporters (-37 per cent), while major exporters of manufactured goods and of non-fuel commodities were less affected (-5 per cent).
The estimated fall in exports for the LDC group during 2015 was quite severe and not at all compensated by the developments in their imports. Total exports
Figure Intro.2. Current account balance of LDCs, 2000–2021 (Billions of current dollars)
-120 -100 -80 -60 -40 -20 0 20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017p 2018p 2019p 2020p 2021p
African LDCs and Haiti Asian LDCs Island LDCs LDCs total
Source:UNCTAD secretariat calculations, based on data from IMF, World Economic Outlook database (accessed July 2016).
Note: p=projected.
…and all African LDCs had current account deficits...
…reflecting depressed external demand, weak commodity prices,
dollar appreciation and production constraints.
Figure Intro.3. Current account balance as a percentage of GDP, 2015
-40 -30 -20 -10 0 10 20 30 40 50
-50 Mozambique
Liberia Djibouti Tuvalu Bhutan Lao People’s Dem. Rep.
Guinea Mauritania Niger Burundi Gambia Sierra Leone Rwanda Ethiopia Chad Central African Republic South Sudan Togo Dem. Rep. of the Congo Sao Tome and Príncipe Cambodia Benin Comoros Vanuatu Myanmar Uganda Malawi United Rep. of Tanzania Angola Senegal Equatorial Guinea Burkina Faso Yemen Zambia Mali Lesotho Solomon Islands Haiti Eritrea Madagascar Bangladesh Guinea-Bissau Afghanistan Nepal Timor-Leste Kiribati
Source: UNCTAD secretariat calculations, based on data from IMF, World Economic Outlook database (accessed July 2016).
of goods and services of this group of countries amounted to $201 billion in 2015 at current prices, a decrease of 20.2 per cent from $252 billion in 2014, itself a small decline from the post-2000 peak of $256 billion, achieved in 2013.
All LDC groupings experienced a fall in total exports of goods and services.
The decline was most pronounced among the primarily commodity-export-dependent group of African LDCs and Haiti and least pronounced among the services-export-oriented group of island LDCs (table Intro.2).
LDC exports of goods and services fell by 20.2 per cent
to $201 billion in 2015.
Table Intro.2. LDC exports and imports of goods and services, 2005–2015, selected years (Millions of current dollars )
2005 2006 2010 2013 2014 2015 % change
(2014–2015) Total trade in goods and services
Exports
LDCs 95 892 117 795 190 934 255 864 251 842 200 905 -20.2
African LDCs and Haiti 66 919 83 769 138 522 183 813 175 296 131 951 -24.7
Asian LDCs 28 549 33 545 51 530 70 806 75 254 67 755 -10.0
Island LDCs 424 481 882 1 244 1 292 1 199 -7.2
Imports
LDCs 108 319 125 101 220 519 312 908 333 518 305 083 -8.5
African LDCs and Haiti 73 094 83 765 151 278 210 631 221 764 190 199 -14.2
Asian LDCs 34 334 40 168 66 416 99 218 108 666 111 888 3.0
Island LDCs 892 1 168 2 826 3 058 3 087 2 996 -3.0
Trade balance
LDCs -12 427 -7 306 -29 585 -57 044 -81 675 -104 178 27.6
African LDCs and Haiti -6 175 4 -12 755 -26 818 -46 468 -58 249 25.4
Asian LDCs -5 784 -6 623 -14 886 -28 411 -33 412 -44 133 32.1
Island LDCs -468 -687 -1 944 -1 814 -1 795 -1 796 0.1
Total trade in services
Exports
LDCs 12 030 14 070 24 390 36 880 39 820 40 330 1.3
African LDCs and Haiti 7 840 9 150 14 020 22 140 22 730 22 740 0.0
Asian LDCs 3 940 4 620 9 840 14 060 16 390 16 940 3.4
Island LDCs 250 300 530 680 690 640 -7.2
Imports
LDCs 28 330 33 160 61 450 81 020 85 900 79 550 -7.4
African LDCs and Haiti 22 720 26 200 48 940 63 330 66 540 58 460 -12.1
Asian LDCs 5 370 6 470 10 960 16 540 18 270 19 940 9.1
Island LDCs 240 490 1 550 1 150 1 090 1 140 4.6
Trade balance
LDCs -16 300 -19 090 -37 060 -44 140 -46 080 -39 220 -14.9
African LDCs and Haiti -14 880 -17 050 -34 920 -41 190 -43 810 -35 720 -18.5
Asian LDCs -1 430 -1 850 -1 120 -2 480 -1 880 -3 000 59.6
Island LDCs 10 -190 -1 020 -470 -400 -500 25.0
Total trade in goods
Exports
LDCs 83 862 103 725 166 544 218 984 212 022 160 575 -24.3
African LDCs and Haiti 59 079 74 619 124 502 161 673 152 566 109 211 -28.4
Asian LDCs 24 609 28 925 41 690 56 746 58 864 50 815 -13.7
Island LDCs 174 181 352 564 602 559 -7.1
Imports
LDCs 79 989 91 941 159 069 231 888 247 618 225 533 -8.9
African LDCs and Haiti 50 374 57 565 102 338 147 301 155 224 131 739 -15.1
Asian LDCs 28 964 33 698 55 456 82 678 90 396 91 948 1.7
Island LDCs 652 678 1 276 1 908 1 997 1 856 -7.1
Trade balance
LDCs 3 873 11 784 7 475 -12 904 -35 595 -64 958 82.5
African LDCs and Haiti 8 705 17 054 22 165 14 372 -2 658 -22 529 747.6
Asian LDCs -4 354 -4 773 -13 766 -25 931 -31 532 -41 133 30.4
Island LDCs -478 -497 -924 -1 344 -1 395 -1 296 -7.1
Source: UNCTAD secretariat calculations, based on data from the UNCTADstat database (accessed July 2016).
Imports of goods and services also contracted for the LDC group, falling from $334 billion in 2014 to $305 billion in 2015. However, the decline in imports was not enough to outweigh the decrease in export earnings, so that the trade balance deficit in goods and services rose in nominal terms from $82 billion in 2014 to $104 billion in 2015. The trade balance deficit in goods and services rose fastest among Asian LDCs from 2014 to 2015 (32.1 per cent), while it was virtually stagnant in island LDCs.
Differences in trade structures and composition matter. Countries that are primarily commodity export dependent, mostly in the African LDCs and Haiti group, experienced a severe deterioration in their merchandise trade deficit in 2015, which grew by a factor of more than eight in nominal terms. In this group of countries, fuels, ores, metals, precious stones and gold accounted in 2015 for 77.7 per cent of merchandise exports, whereas they accounted for 59.5 per cent among LDCs as a group, only 20.5 per cent among Asian LDCs and only 7.9 per cent among island LDCs (figure Intro.4). By contrast, the primarily services-export-oriented island LDCs group experienced a slight improvement in its merchandise trade deficit (a nominal decrease of 7.1 per cent), matched by a manageable increase in its services trade deficit (a nominal increase of 25 per cent).
Figure Intro.4. Composition of LDCs’ merchandise exports and imports, 2015 (Per cent)
13.9
43.3
16.2
26.3 14.2
56.4
21.3
7.7 12.7
15.3
5.2
66.3
75.7
2.7
5.2
4.9
0 20 40 60 80
Agriculture and food
Fuels
Ores, metals and precious stones
Manufactured goods
Agriculture and food
Fuels
Ores, metals and precious stones
Manufactured goods
Exports
18.6
13.4
2.5
63.3 16.9
13.3
2.5
65.3 21.0
13.6
2.4
60.6 26.9
15.1
0.8
50.2
0 20 40 60 80
Imports
LDCs African LDCs and Haiti Asian LDCs Island LDCs
Source:UNCTAD secretariat calculations, based on data from the UNCTADstat database (accessed July 2016).
The merchandise trade deficit among LDCs as a group almost doubled from
$36 billion in 2014 to $65 billion in 2015. It widened among all LDC subgroups except for island LDCs. The services trade deficit fell among LDCs as a group from $46 billion in 2014 to $39 billion in 2015. It narrowed among African LDCs but widened in Asian and island LDCs from 2014 to 2015 (table Intro.2).
In relation to trade, the IPoA sets a major target for LDCs of doubling the share of LDCs in global exports by 2020. Data from the UNCTADstat database reveal that the LDC share of global exports of goods and services rose from 0.75 per cent in 2005 to 0.96 per cent in 2015. These low figures highlight the serious challenges to competitiveness faced by LDCs, and their important deficits in productive and institutional capacities, as discussed in the remainder of this Report. Between 2011 and 2015, LDCs’ share in global exports of goods and services actually fell from 1.05 per cent to 0.96 per cent, which implies that, since the adoption of the IPoA, LDCs have been unable even to prevent their share of global exports from declining.