Recent Trends in World Trade: Insights and Forecasts
This report by Alain Henriot provides a comprehensive overview of the recent trends in world trade amidst the economic recovery following the 2008 financial crisis. It discusses the link between the world economy and trade, the dynamics of imports and domestic demand, and the role of price competitiveness in exports. Highlighting signs of recovery in emerging markets, particularly in China, it also addresses concerns regarding protectionism in the U.S. and Europe, and the potential for a double dip in China's economy. The report outlines both risks and growth forecasts for 2010.
Recent Trends in World Trade: Insights and Forecasts
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Presentation Transcript
Recent trends in World Trade By Alain Henriot Delegate Director Coe-Rexecode (Paris) Kiel, 15th-16th March 2010
Content 1. Overview of the world economy and the linkage with world trade 2. Imports and domestic demand 3. Exports and price competitiveness 4. Trade balances
Financial and raw materials markets have given an early sign of the rebound at the beginning of 2009, but show now signs of hesitation
Raw material and energy prices have also strongly recovered but signs of hesitation can be seen recently
World economy fell into recession in 2008Q4 and 2009Q1 before registering a positive growth in 2009Q2, which strengthened in the second half of 2009
World industrial production back to previous trend (but a gap remains in terms of level)
« Soft » data (here world PMI export order books) gave a leading signal of the upturn, but were misleading on the exact timing of the recovery and to some extent on its magnitude
The gap between the current level of world trade and the pre-crisis level remains big although narrowing …
… the consequence of an historical drop in trade flows World trade: an historical perspective
Turning points of world trade and industrial production growth cycles are very similar Growth cycles of world imports and world industrial production
World trade forecast: a strong rebound followed by a moderate growth (+7.4% in 2010 after -13.5% in 2009)
First signals of a recovery were observed in emerging countries but no decoupling Import levels in volume terms
China played a leading role, leading other Asian countries and then Western economies China: imports by main suppliers
The situation in other emerging countries remain heterogeneous regarding imports dynamism, although all regions came back to a positive trend Import levels in volume terms
We can expect only a moderate growth of developed countries imports in 2010 in volume terms. No further gains of terms of trade in 2010 (transfers of about 1% of GDP in 2009). Import levels in volume terms
Weakness of the Euro: a relief for the Euro area exporters Price competitiveness: national export prices/competitors in a common currency
Main trade imbalances have not disappeared with the crisis Current account balance
Forecast risks Downside risks . Would Europe and the U.S. find enough support from their internal demand to keep the global recovery continuing? . Overheating in China might trigger a double dip late 2010 . Global imbalances put a threat on the exchange rate system . As a consequence of trade deficits and high unemployment, the U.S. and Europe can be attracted by protectionist measures
Forecast risks Upside risks . The catching up process (huge output gap) might imply a quicker and longer economic growth of activity and trade than expected . Emerging countries could take the lead of world trade growth to satisfy internal needs
