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The Slowdown in Global Trade: A Symptom of a Weak Recovery?

Author

Listed:
  • Aqib Aslam

    (International Monetary Fund (IMF))

  • Emine Boz

    (International Monetary Fund (IMF))

  • Eugenio Cerutti

    (International Monetary Fund (IMF))

  • Marcos Poplawski-Ribeiro

    (International Monetary Fund (IMF))

  • Petia Topalova

    (International Monetary Fund (IMF))

Abstract

Global trade growth has slowed since 2012 relative both to its strong historical performance and to overall economic growth. This paper aims to quantify the role of weak economic growth and changes in its decomposition in accounting for the slowdown in trade using a reduced form and a structural approach. Both analytical investigations suggest that the overall weakness in economic activity, particularly investment, has been the primary restraint on trade growth, accounting for about 80% of the decline in the growth of the volume of goods trade between 2012–2016 and 2003–2007. However, other factors are also weighing on trade in recent years, especially in emerging market and developing economies, as evidenced by the non-negligible role attributed to trade costs by the structural approach.

Suggested Citation

  • Aqib Aslam & Emine Boz & Eugenio Cerutti & Marcos Poplawski-Ribeiro & Petia Topalova, 2018. "The Slowdown in Global Trade: A Symptom of a Weak Recovery?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(3), pages 440-479, September.
    • Handle: RePEc:pal:imfecr:v:66:y:2018:i:3:d:10.1057_s41308-018-0063-7
    DOI: 10.1057/s41308-018-0063-7
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    Cited by:

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    3. Gaulier, Guillaume & Sztulman, Aude & Ünal, Deniz, 2020. "Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components," International Economics, Elsevier, vol. 161(C), pages 219-236.
    4. William F. Lincoln & Andrew H. McCallum & Michael Siemer, 2019. "The Great Recession and a Missing Generation of Exporters," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(4), pages 703-745, December.
    5. Hector Perez-Saiz & Mr. Jemma Dridi & Tunc Gursoy & Mounir Bari, 2019. "The Impact of Remittances on Economic Activity: The Importance of Sectoral Linkages," IMF Working Papers 2019/175, International Monetary Fund.
    6. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2021. "Supply Chain Fragmentation and the Global Trade Elasticity: A New Accounting Framework," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(4), pages 656-680, December.
    7. Simola, Heli, 2023. "Consumed in China: Rebalancing China's demand and Chinese imports," BOFIT Policy Briefs 5/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
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    9. Pahnke, André & Reiff, Annika & Wolter, Hans-Jürgen, 2023. "Entwicklungstendenzen globaler Wertschöpfungsketten aus Sicht mittelständischer Unternehmen," IfM-Materialien 302, Institut für Mittelstandsforschung (IfM) Bonn.
    10. Ahn,Jaebin & Choi,Jaerim & Chung,Sunghoon, 2022. "Labor Market Rigidity at Home and Multinational Corporations’ Flexible Task Reallocation Abroad," Policy Research Working Paper Series 10114, The World Bank.
    11. Simola, Heli, 2021. "Trade collapse during the covid-19 crisis and the role of demand composition," BOFIT Discussion Papers 12/2021, Bank of Finland Institute for Emerging Economies (BOFIT).
    12. B. Ben Moummad & E. Ezzahid & A. Zoglat, 2023. "The impact of capital goods prices on Africa's economic performance," South African Journal of Economics, Economic Society of South Africa, vol. 91(1), pages 68-84, March.
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    14. Gregori, Tullio, 2021. "Protectionism and international trade: A long-run view," International Economics, Elsevier, vol. 165(C), pages 1-13.
    15. Peter A.G. van Bergeijk, 2019. "Deglobalization 2.0," Books, Edward Elgar Publishing, number 18560.

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    More about this item

    Keywords

    E3; F14; F17; F4;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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