Over the last decade, global services exports have grown at an annual average rate of around 6.5% - higher than the growth rate of nominal global GDP and global goods exports. The worldwide value of services exports now stands at around $5 trillion.
PwC economists report that the G7 economies contribute just under 40% of global services exports, with the US ranking as the world’s largest exporter.
But between 2010 and 2015, it was Japan that enjoyed the highest growth in services exports (10.4%) of the G7, followed by France (7.7%) and Germany (6%). However, the value of Japanese services exports remains some way behind the US and UK.
E7 registers fastest growth
But it’s in the E7 (group of seven emerging economies) that the fastest growth has occurred since 2010, with average annual growth of services exports above 10% in every E7 economy.
China is the largest services exporter in the E7, enjoying average annual services exports growth of 14.3% since 2010. Though India (15.2%) and Turkey (15.2%) have been the top performers.
A closer look at the sectors behind the growth reveal some interesting developments.
“The increasing prominence of the Chinese renminbi in global markets, coupled with a growing FS sector, suggest that financial services will have an important part to play as the Chinese economy continues to rebalance," says Barret Kupelian, Senior Economist, PwC.
“And in India, travel exports – or tourism spending – grew at a faster rate than overall services exports. India does not currently attract as many visitors as some of its E7 peers, but it does occupy a sweet spot with relatively fast growth in both the number of international arrivals and tourism spending.”
So what next for global services trade? Talks are ongoing on the Trade in Services Agreement, a global agreement involving 23 World Trade Organisation members, including the EU. Striking a deal around these negotiations would provide the necessary push to global services exports.