World economy: Globalisation's retreat?

by / Thursday, 25 June 2015 / Published in Economy

WORRIES about the global economy are not just confined to sluggish growth, deteriorating demographics or the overhang of consumer and government debt. World trade, which used to grow faster than GDP, seems to have turned sluggish. In each of the last three years, growth has been less than 3% in real terms. The World Trade Organisation is hoping for 3.3% this year but it regularly has to cut its forecasts; there have been reports of export declines in recent weeks from Taiwan, Egypt, Indonesia, Jordan, and China, to name but a few.&nbsp;Some of this year's decline is down to a stronger US currency, of course, which reduces the dollar value of exports. But it is hard to believe that is the only thing going on. A new book from Vox EU covers the subject in great detail. In one chapter, Douglas Irwin looks at the historical record; Angus Maddison's data suggests trade was growing at more than 3% a year in the first great era of globalisation from 1870 to 1913, slowed to less than 1% a year from 1913 to 1950 thanks to two world wars and the Great Depression, and then took off in the "wonder years" from 1950-1973 at more than 7% a year. Figures from the WTO suggest the peak decade was the 1960s. Trade growth slowed after that, until the 1990s when China burst on to the scene. But the current century has seen another slowdown, which worsened once the financial crisis hit.You won't …<div class="og_rss_groups"></div>
Source: The Economy