Thursday, October 16, 2014

GLOBAL TRADE, THE ECONOMIST


The future of global trade
Many economists are reassessing their outlook for the global economy and, particularly, for trade. For much of the last two decades growth in trade has been faster than GDP growth, as supply chains internationalised and the movement of intermediate components between countries increased rapidly. This trend reversed in 2012 and 2013, when growth in world trade shrank below that of GDP. This may have been a temporary blip, but does highlight that the future of global trade may be very different from the past.

The performance of many trade-dependent countries has been poor recently, as events such as the conflict in Ukraine have taken their toll. If it is indeed the case that multinational companies are rethinking their attitudes towards risk and moving to shorten supply chains as a result, then trade in semi-finished products will fall and GDP may grow faster than trade on a more regular basis. Further, the rise of important consumer markets in the emerging world will diversify traffic away from the traditional large east-west container routes.

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