Here's a chart from the Federal Reserve Bank of Dallas that shows what has happened to global trade over the last two years:

No huge surprises there. The global economic crisis and the great recession brought about a lower demand for goods. But the rate of the drop, as Jian Wang, senior economist at the Dallas Fed, points out was at 9% globally for 2009. That's the "biggest contraction since World War II."
Jiang, in his Economic Letter, shows that imports and experts tend to be more volatile than GDP, and indeed the drop in demand for durable goods during this last recession dropped at a greater rate than GDP. This is especially true when looking at the US economy. And the US economy is key when looking at global trade, as Jiang writes:
The expansion of global trade was fueled by strong U.S. demand the past two decades. The country’s close-to-zero household saving rate wasn’t sustainable in the long run. During the current recession, the U.S. savings rate has increased, and the current account deficit has narrowed. If U.S. households’ frugality endures, demand may remain relatively soft in the near future. A quick global trade rebound may depend on trade-surplus countries boosting domestic consumption.
Read Durable Goods and the Collapse of Global Trade here.
Posted
02-11-2010 9:26 AM
by
Graham Griffith
Filed under: GDP, exports, durable goods, imports, demand, global trade, Dallas Fed, US demand, decline in global trade, impact of US economy on global trade, Jian Wang, GDP and global trade