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China’s slowdown, weak growth in some developing countries and low demand remain persistent problems for trade.
China’s slowdown, weak growth in some developing countries and low demand remain persistent problems for trade.

Global Trade Slowest in 7 Years

The estimated volume of goods and services traded globally has been stalled for more than 18 months to around $13 trillion

Global Trade Slowest in 7 Years

Global trade volume only rose 0.1% in June compared to a year ago, according an analysis of government global trade data released Thursday by Panjiva, an analytics firm. It's the lowest monthly gain since 2009, it said, CNNMoney reported.

"We have some pretty clear signs that global trade has slowed down," says Chris Rogers, a research analyst at Panjiva.

The numbers come a day before the US Census releases data on July US trade.

American exports in June were down 5% from a year ago and its trade balance declined for the third straight month, Census data shows. Another region pulling down global trade is Latin America. Its total trade volume decreased in June too, Panjiva found.

The strong dollar remains a major headwind for American companies that sell their products overseas. A strong currency makes US products more expensive—and less attractive—to foreign buyers.

China's slowdown, weak growth in some developing countries and low demand remain persistent problems for trade too.

Not everyone is down on global trade. A recent survey by American Express and the Economist Intelligence Unit found that 66% of international firms believe trade with the US will increase over the next few years.

However, one challenge on the horizon is Brexit, the UK's decision to leave the European Union. It will force the UK to rewrite a litany of trade agreements and could cool down trade ties between the UK and some of its major trade partners in Europe. That would spell bad news for the global economy, which is already growing at a "fragile" pace, according to the International Monetary Fund.

Globalization Is in Retreat

The process of globalization is in retreat. The latest victim of the global economic slowdown is international trade: after tumultuous growth in the last 26 years, disrupted only temporarily by the financial crisis of 2008-2009, the estimated volume of goods and services traded globally has been stalled for more than 18 months to around $13 trillion. Social Europe reported.

So long a period of stasis has never been experienced by the world economy before. Of course, there have been some slowdowns in the expansion of trade due to recessions or severe regional crises, but acceleration in key areas has more than offset the decline recorded elsewhere.

For example, after the international collapse in trade of 2009, growth rates in developed countries halved, but the volumes globally traded continued to expand, sustained by the boom in emerging economies. The observable data (taken from CBP Netherlands Bureau for Economic Policy analysis database, probably the most accurate data repository publicly available) clearly highlights how emerging economies have suffered more from the collapse in trade post-Lehman Brothers, and how the same countries have quickly recovered lost ground, increasing their weight in the global market.

Among the emerging economies, China and India in particular have taken the lion’s share, while the continuing Eurozone crisis has reduced the influence of the old continent in the global market. According to empirical evidence, China, Taiwan and India have multiplied by a factor of four their trading volumes from a total of $1 trillion in 2000 to over $3.5 trillion in 2012; the first overtaking by the emerging Asian economies at the expense of the US took place in 2002, while in 2012 the same economies surpassed the eurozone as the leading area in international trade.

Conversely, the stagnation of the eurozone from 2011 has been spectacular, mainly due to the collapse of imports in European peripheral countries; the peak level of $3.7 trillion in trading volumes was reached in 2007 and never fully recovered.

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