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Does the Global Trade Slowdown Matter?
Report

Does the Global Trade Slowdown Matter?

World Bank, 2016 more...

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Editorial Rating

7

Qualities

  • Controversial
  • Analytical
  • Innovative

Recommendation

Global trade boomed during the 20 years leading up to the Great Recession, but it has since fallen so far that it trails the global GDP growth rate. At the same time, trade has become less responsive to changes in GDP, causing some experts to fret that reduced trade could impinge on productivity growth. Economists Cristina Constantinescu, Aaditya Mattoo and Michele Ruta offer a fresh approach to investigating the link between exports and economic growth. Their esoteric analysis may make for painful reading for investors anticipating good news as well as for noneconomists seeking more accessible prose. getAbstract suggests their scholarly report to economists, policy makers, analysts and executives.

Take-Aways

  • The rate of global trade growth plunged from 7% in the 1987–2007 period to 3% in the 2012–2015 period.
  • Elasticity, or the responsiveness of global trade to GDP, has dropped since the 1990s.
  • A mix of cyclical and long-term factors accounts for the deceleration of global trade growth. Since the Great Recession, the demand for imports has shrunk in both developed and emerging economies.

About the Authors

Cristina Constantinescu, Aaditya Mattoo and Michele Ruta are economists at the World Bank.


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    Y. L. 8 years ago
    The rate of growth just reflects one aspect, also need to consider the base (the base is much larger than 1987–2007 period).