Monday, May 23, 2011

Global Trade Has Recovered From the Great Recession

It's been a while since we looked at the WTO's statistics for global trade.  The latest data are above through March 2011.

A couple of cautions: the WTO converts all trade data to US dollars at prevailing market exchange rates.  The data are not seasonally adjusted, or corrected for inflation.  I then convert to an index based on Jan 2006 being 100, and doing some correction for missing data.  In theory, imports and exports should be equal on a global basis, so the discrepancy above is due to measurement error.  Notwithstanding the caveats, this is a pretty interesting and useful series, and was helpful in seeing the slowdown in the global economy last summer.

This time, what seems interesting is that the spring surge in trade is larger than usual (see red oval versus green ovals for this period in prior years).  Trade has now pretty much recovered to the peak level of mid 2008.  The great recession caused a huge fall of over 40% in the second half of 2008, but, two years later, the global economy has made up the lost ground (the change in the price level since then is only a couple of percent, so it wouldn't make much difference to the picture if we corrected for inflation).

In the US economy, April has bought some signs of weakening.  It will be interesting to see if global trade statistics reflect this in coming months.


Nick G said...


The most interesting proposition I've heard lately is that China is in a massive capex bubble which must burst at some point, though the timing is murky.

The argument is that China's economy is badly unbalanced, with capex equal to 50%+ of the economy (and rising - another sign of instability).

The commodity consumption and price surge is due mostly to China, so a burst China bubble would deflate the commodity price peak. It would also hurt the rest of the world economy, including international trade (bringing us back to your post).

What do you think?

James said...

Stuart, You might be interested in the World Trade Monitor from the Netherlands Bureau of Economic Policy Analysis. It is goods-only, but seasonally- and inflation-adjusted, and widely used.

About the WTO series, NBEPA says, "The WTO series are quite different from the series from the CPB, OECD MEI, OECD EO and IMF WEO (see Figure 3.6, Table 3.5 and Annex Table A.1). Main reason is probably the use of unit value series instead of proper price series."

There is a graph on my site.