It’s always important to look at the big picture. I do so focusing on the various data series for world trade. The latest data show that the global boom has turned into a soft patch. Evidence of an imminent double dip in the world economy is scarce and flimsy. Let’s have a closer look at the big picture, which we update regularly in our World Trade chart book.
(1) The volume of world trade has stalled. The Netherlands Bureau of Economic Policy compiles a monthly index on the volume of world trade. It rebounded smartly from the recession of late 2008 and early 2009 to a new high in March of this year. Since then, it’s been stuck between 165 and 170. It is highly correlated with the OECD’s index of global production (i.e., for the 30 OECD countries plus the six largest emerging ones). The production index has also stalled this year, but managed to edge up to a new record high during July. (See Figure 6.)
(2) In current dollars, the value of world exports has also stalled. This series is compiled by the IMF, and has been hovering around $18 trillion, at an annual rate, from March through July. Not surprisingly, it tends to be highly correlated with the CRB raw industrials spot price index, which is down 15.5% since its record high on April 12. That’s one of the few signs that the soft patch is getting softer. However, the CRB index still exceeds its previous cyclical (and record) high of early 2008 (Figure 9).
(3) The exports of the G7 countries rose to a new cyclical high during August. The total was $6.08 trillion (saar). There were strong surges to new cyclical highs in Germany, France, the UK, and Japan (record high). On the other hand, American and Italian exports flattened during the month, Canada edged down during the month (Figures 11-13). Over the past 12 months, the G7 countries accounted for only one-third of the value of world trade, down from 50% in 1996 (Figure 8).
(4) Exports have stalled near record highs in many emerging economies. Actually, exports in some countries are starting to look a bit toppy, especially in India, Malaysia, South Korea, Taiwan, Brazil, Russia, and the Ukraine. Still making new record highs are Singapore, Argentina, and Columbia.
(5) China’s export engine seems to be sputtering just a bit in the EU and the US. I’ve saved the most interesting trade story for last. China’s exports have flattened around $1.8 trillion (saar) for the past year. Not surprisingly, the weakness is in exports to the EU and the US. You can see this in Figures 13-16 of our China chart book. Today’s charts show the y/y growth rates of Chinese exports to the EU and the US. In September, the former was up 10.4%, while the latter was up 12.3%. Both growth rates are relatively low and remain in their downtrends of the past two years. Both are highly correlated with their respective manufacturing purchasing managers indexes (M-PMIs), which have been heading down most of this year.
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