The Slowdown in Global Trade: A Symptom of A Weak Recovery
IMF Working Papers, November 15, 2017
Source details
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- The Slowdown in Global Trade: A Symptom of A Weak Recovery
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Bibliographic details
- Authors: Aqib Aslam, Emine Boz, Eugenio M Cerutti, Marcos Poplawski Ribeiro, Petia Topalova
- Published: November 15, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484328279.001
Core finding
- Global trade growth has slowed since 2012 relative both to its strong historical performance and to overall economic growth.
- Using both a reduced form and a structural approach, the paper finds that the overall weakness in economic activity, particularly investment, has been the primary restraint on trade growth.
- Weak economic activity and investment account for over 80 percent of the decline in the growth of the volume of goods trade between 2012–16 and 2003–07.
- Other factors, notably trade costs, have a non-negligible role in weighing on trade in recent years, especially in emerging market and developing economies.
Analytical approaches and scope
- Methods used:
- Reduced form approach.
- Structural approach.
- Focus:
- Quantifying the role of weak economic growth and changes in its decomposition in explaining the trade slowdown.
- Emphasis on goods trade volume growth.
Implications and interpretation
- Primary implication: Weak aggregate demand, with investment weakness prominent, drove the bulk of the trade slowdown observed after 2012.
- Secondary implication: Changes in trade costs and factors beyond demand have contributed meaningfully to the slowdown in emerging market and developing economies, per the structural analysis.
Content in this bundle
- The Slowdown in Global Trade: A Symptom of A Weak Recovery, WP/17/242, November 2017