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Understanding the World Trade Collapse

  • Calista Cheung
  • Stéphanie Guichard

The collapse in world trade volumes at the end of 2008 and beginning of 2009 was exceptional by historical standards. This paper shows that world demand (to which trade has become more responsive in recent decades) can explain most of the collapse in world trade, but that tight credit conditions have likely amplified the short-term trade response. Credit tightening likely accelerated the trade decline through trade finance constraints and its relatively larger impact on trade-intensive sectors. A portion of the trade decline remains unexplained, which may reflect a possible breakdown in global supply chains. Looking ahead, the pace of normalisation in financial conditions and the future evolution of global supply integration will affect the speed of recovery in trade and global output. Comprendre l'effondrement du commerce mondial L’effondrement du volume des échanges mondiaux à la fin de 2008 et au début de 2009 est exceptionnel dans une perspective historique. Ce document montre que l’essentiel de cet effondrement peut s’expliquer par une baisse de la demande mondiale (à laquelle le commerce est devenu plus réactif au cours des dernières décennies), mais que le resserrement des conditions de crédit a probablement joué un rôle important. La raréfaction du crédit a vraisemblablement accéléré la chute du commerce via son impact sur le financement des échanges et son impact relativement plus prononcé sur les secteurs les plus intenses en commerce. Une partie de la chute du commerce demeure inexpliquée, et pourrait refléter une rupture de chaînes d'approvisionnement mondiales. Pour l'avenir, le rythme de la normalisation dans les conditions financières et de l’évolution future de l’intégration de la production mondiale affectera la vitesse de la reprise du commerce et de la production mondiale.

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File URL: http://dx.doi.org/10.1787/220821574732
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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 729.

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Date of creation: 30 Oct 2009
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Handle: RePEc:oec:ecoaaa:729-en
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