CPB Netherlands Bureau for Economic Policy Analysis Global trade Is the post-crisis slow- down the new normal? Paul Veenendaal
CPB Netherlands Bureau for Economic Policy Analysis Global trade Is the post-crisis slow-down the new normal? Paul Veenendaal.
Jan 19, 2016
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CPB Netherlands Bureau for Economic Policy Analysis
Global trade
Is the post-crisis slow-down the new normal?
Paul Veenendaal
CPB Netherlands Bureau for Economic Policy Analysis
Storyline
• Next year’s global trade growth forecasts too optimistic since 2010
• Fall in commodity prices hurts emerging economies
• Trade slowdown mainly due to post-crisis slump
• Trade growth may attain pre-crisis levels when commodity prices recover and Europe continues its upward path
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
OECD forecasts of global trade growth since 2010
22 October 2015
0
1
2
3
4
5
6
7
8
9
2011 2012 2013 2014 2015 2016 2017
December 2010 June 2011 December 2011 June 2012 December 2012 June 2013
November 2013 May 2014 November 2014 June 2015 October 2015
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Slowdown of global trade compared to global gdp
22 October 2015
40
50
60
70
80
90
100
110
120
130
140
2000 2002 2004 2006 2008 2010 2012 2014 2016
World gdp World trade
2010=100
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Recent global gdp and trade growth forecasts
22 October 2015
• Here we go again: lowering next year’s global trade forecast• Reasons:
– declining goods trade in first two quarters of 2015 (CPB WTM)– growth slowdown in emerging economies, partly due to falling
raw material prices
Global GDP Global Trade
2015 2016 2015 2016
EO97 June 3.1 3.8 3.9 5.3
CPB September 3.2 3.8 1.3 5.1
WEO October 3.1 3.6 3.2 4.1
STEP98 October 2.0 3.5
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Commodity prices are still declining
22 October 2015
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20
40
60
80
100
120
140
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Raw material price, excl. energy (2010=100) Brent in $/bbl
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Global trade slowdown; two alternative views
22 October 2015
• It’s structural and there to stay– integration of central/eastern Europe and China in the world
economy is completed– globalisation of production has matured– thus: the high rates of trade growth from mid 1980’s till mid
2000’s won’t come back• It’s cyclical and to disappear once the aftermath of the Great
Recession is over– since the Great Recession demand is weak – due to the necessity to reinforce balances and to reduce public
deficits and debts– demand is finally starting to rise in the euro area– if this rise gains momentum global trade growth will increase
• Cf. Hoekman, B. (ed.), 2015, The Global Trade Slowdown: A New Normal?, CEPR/VoXEU
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Globalisation finished? Imports in exports (%), 1995-2011, from WIOD
22 October 2015
10
15
20
25
30
35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China Other EAST-ASIA EU NAFTA RoW
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Ratio of global trade to gdp growth declines after global downturns
22 October 2015
From: Ollivaud, P. and C. Schwelnuss (2015), Does the Post-Crisis Weakness of Global Trade Solely Reflect Weak Demand?, OECD EDWP 1216
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
EU imports in exports for investment and consumption, WIOD
22 October 2015
20
22
24
26
28
30
32
34
36
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EU investment EU consumption
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Conclusions
22 October 2015
• The main cause for the global trade slowdown is cyclical• A persistent EU recovery may provide a boost to global trade
– EU has a relatively high trade to gdp ratio• A return to pre-crisis investment ratio’s will boost trade as well as
investment is more trade-intensive than consumption• The growth slowdown in emerging economies affects world trade
growth negatively– about 45% of value added exports has emerging economies as
final destination (for other East-Asia the share is 60%)• A recovery of raw material prices will foster growth in emerging
economies and promote global trade• If all this would take place the STEP estimate of 3.5% global trade
growth next year might well be too low
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Value added exports to final destinations in advanced and emerging economies, 2011, WIOD
22 October 2015
0
10
20
30
40
50
60
70
80
90
100
Other East-Asia Rest of World NAFTA China EU
Advanced Emerging
CPB Netherlands Bureau for Economic Policy Analysis OECD STEP
Global goods trade and global total trade (NA)
22 October 2015
40
50
60
70
80
90
100
110
120
2000 2002 2004 2006 2008 2010 2012 2014
World trade in goods and services (NA) World trade in goods (WTM)
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