Föhrenbergkreis Finanzwirtschaft

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World Trade Flows Suggest Strong Economic Growth This Year

Posted by hkarner - 26. Mai 2017

Date: 25-05-2017
Source: The Wall Street Journal

The volume of world exports and imports of goods rose by 1.5% in March

Danish shipping and oil giant A.P. Moller-Maersk said container volumes were up 10% in the first quarter.

World trade flows grew in the first quarter, continuing a recovery that began in the second half of last year in an indication that the global economy may be set to enjoy a year of stronger growth.

World trade flows grew at the slowest pace since the financial crisis in 2016 as a whole, but there are signs 2017 will mark a rebound.The Netherlands Bureau for Economic Policy Analysis said Wednesday that the volume of world exports and imports of goods rose by 1.5% in March, and was up 1.4% in the first quarter compared with the final quarter of 2016.

The revival in trade flows has also been noted by logistics companies. The International Air Transport Association has reported that demand for airfreight was 11% higher in the first quarter than the same period a year earlier, while Danish shipping and oil giant A.P. Moller-Maersk earlier this month said container volumes were up 10% during the three-month period.

While trade flows are driven by global economic growth, economists have long believed they in turn boost growth, and worried that recent weakness is contributing to the anemic nature of the global expansion.

The sluggishness of trade in 2016 and previous years led many economists to wonder whether changes in the structure of the global economy would weaken growth over the medium term. They noted an increase in barriers to trade other than tariffs and a reversal in the creation of what are known as global value chains, or the process by which large companies moved parts of their production and associated jobs overseas.

More recently, the World Trade Organization has presented research showing trade flows are particularly strong when investment spending is high, linking the postcrisis weakness in spending on plant and equipment to the trade slowdown.

There are signs that investment spending has picked up in 2017, and the WTO forecasts that trade flows will rise by 2.4% this year, and could increase by as much as 4% in 2018.

However, much depends on whether the uneasiness over persistently large trade deficits that have been articulated by U.S. President Donald Trump lead to new barriers to the flow of goods across borders.


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