After a sharp revival, global trade growth is slowing
In, out, shake it all about. Last year was a terrible one overall for
global trade. Volumes fell by 14.4 percent, according to the World Bank.
But that figure masks whipsawing activity throughout the year. The
Netherlands Bureau for Economic Policy Analysis reckons that the volume
of world exports fell by 10.6 percent in the first quarter of 2009, grew
only slightly in the second and bounced by 3.5 percent in the third
quarter. Bernard Hoekman, director of the bank’s trade group, says the
three months to September saw a “sharp V-shaped recovery”.
There are two worries to spoil this improving picture. One is what
happened after the third quarter. Hoekman believes that there was a
“distinct slowdown” in the pace of recovery towards the end of 2009.
Preliminary figures suggest that the volume of world trade expanded by
just 1.1 percent in November, less than the October increase of 1.4
percent and much less than the 5.4 percent rise in September. The bank
reckons that the value of world trade (which is also affected by price
and exchange-rate fluctuations) fell slightly in November.
A rebound in shipments in and out of some of the world’s busiest
ports also faded. Why would the resurgence have fizzled? The best
explanation is that third-quarter growth was buoyed by the rebuilding of
inventories, which were slashed in the depths of the crisis. That effect
may have ebbed.
The second worry is for the rich world. Growth in global demand in
recent months has come disproportionately from emerging economies. True,
everyone has benefited from China’s remarkable stimulus spending. The
World Bank’s economists point out that China’s share of world imports
has grown from around 10 percent in mid-2008 to over 12 percent last
year. This has pulled along leading producers of capital goods, like
Germany, whose exports grew by a healthy 3.3 percent in the three months
Chinese demand has also boosted Japan’s exports, which grew by 12.1
percent in the year to December. China has replaced America as Japan’s
But stronger growth in developing markets is on the whole better news
for producers of basic consumer goods than it is for rich-world
The ten countries whose foreign sales grew fastest in the three
months to October were all developing and emerging economies, including
several eastern European countries, Indonesia and South Africa.
The fastest-growing rich exporter was Australia, which sends nearly a
quarter of the goods it sells abroad to China and India. Nine of the ten
countries whose imports grew most rapidly were also emerging economies.
This may change if rich-world growth picks up, increasing demand for
the more sophisticated goods that industrialised countries export.
According to the IMF’s latest projections on January 26, rich
countries’ GDP will grow by 2.1 percent this year and 2.4 percent in
2011, after shrinking by 3.2 percent in 2009. The fund now expects the
world economy as a whole to grow by 3.9 percent this year, up from its
October prediction of 3.1 percent.
Faster expansion is good for all exporters although growth in both
output and trade will be hurt unless calls for protectionism, which are
likely to increase if unemployment remains high, are resisted. Even so,
the V-shape may prove to have been a one-quarter phenomenon.
Economist print edition