Globalization Disrupted : Will world trade continue to disappoint?

Since the onset of the financial crisis, world trade is no longer growing twice as fast as output. I examine the reasons behind this in this presentation, an updated version of one produced to support a panel debate at a trade finance conference in Chicago last month. Although many commentators expect the headwinds confronting trade to continue, there are important offsetting factors in the longer term. The key points are as follows:

  • Growth in the developed markets is slower, reflecting sluggish domestic demand…
  • …especially in big deficit nations, which are trying to emulate Germany’s export success…
  • …with varying degrees of success – US and Spain have done well
  • Offshoring and re-imports have waned
  • Disruptive technologies may also reduce trade in the long term
  • But there could be positives from…
  • 1. Further Trade liberalisation.
  • 2. Offshoring : the spreading of Western FDI away from China to other low cost countries
  • 3. Offshoring by Chinese companies that want to produce close to their Western customers
  • 4. New energy flows, especially from the US
  • 5. A policy shift to boost infrastructure
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2 Responses to Globalization Disrupted : Will world trade continue to disappoint?

  1. Floesh says:

    German export “succes” is because they make good products but also due to a relative low Euro exchange rate. I think Germany is competitive at a 1,57 USD/EUR level. So a big part of their succes is the low euro due to the PIIGS economies pushing it down.

  2. Floesh says:

    GDP growth of the last few decades was supported by a total credit market growth at twice the rate of GDP growth. In other words this “growth” was borrowed into existence.

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