Global Trade Growth Slowing…

There has been some celebration in the news regarding the recovering US economy, with the GDP gaining some momentum again. A recent post on The Economist points out that any celebration ought to be tempered with a more macro view of things.

The blow to optimism comes on the heels of an updated forecast from the World Trade Organization, which reduced the prediction for international trade growth in 2014 from 4.6% to 3.1%. 2015 was also cut from 5.3% to 4%. It’s a significant reduction with large global implications, but the article points out that even the new forecast is optimistic. Trade from January to June of this year was 1.8% – which means in order to meet the prediction of 3.1%, we need a serious rebound before December.

The trouble is coming from South America. Sure, Asia’s exports are growing much faster than it’s imports, which isn’t helpful, but South American exports actually fell by nearly 1%. Imports were even worse, falling 3.4%.

Struggling and developing economies saw smaller growth rates than the larger powers, which means the pendulum of market share is still swinging out in terms of market share.

What’s strange is that we enjoyed a tremendous period of growth in 2010, which we haven’t matched yet. This is all a result of a slowing of growth in emerging markets. The lack of Chinese demand for imports isn’t helping, either. Then there are the geopolitical issues that have direct effects on the global economy, such as the tough winter in the US in the first quarter, the Russian sanctions, and the rise in Japanese sales tax.

from Mark Tuminello – latest post by Mark Tuminello

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