The decline in global trade from mid-2008 to early 2009 was a key contributor to the global recession.
Global trade is booming once again and is an important factor underpinning the global economic recovery.
Exports and imports continue to grow around the world, in both developed and Emerging Markets.
As trade barriers continue to fall, expect trade globally to increase—and that's very bullish.
It's frequently the things that are little noticed that underpin a healthy economy. And one of those things now is strongly resurgent global trade. Trade globally fell dramatically from mid-2008 to early 2009, down 30% to 40% or more in most major countries, making it a key contributor to the global recession. But now, global trade is booming again.
German exports rose nearly 23% from their April 2009 low. In Asia, Japanese exports have risen 46.5% since their February 2009 low, and South Korean exports hit an all-time high—up 98.4% from their January 2009 low. Great news! But we're not just concerned with exports—it's total trade that counts. Imports are also a good sign of economic health—and they're up big too. German imports were up 32.8% in June since the April 2009 low, and eurozone imports overall increased 26.8% since their May 2009 low. US imports rose 29.1% since May 2009 (Q2 imports recorded the biggest rise in over 20 years), and Japanese imports checked in with a healthy 46.4% increase from its February 2009 low.
And let's not forget Emerging Markets (EM). We tend to focus on these countries' supply of goods and services to international markets—and well we should: Chinese exports, for example, were up 111.8% in June since their low in February 2009. But EMs' fast growth is bumping domestic per-capita income higher, leading to an increase in demand for foreign goods—imports into Brazil and China are up 89.4% and 128.6%, respectively, since February 2009.
Can we expect the trade recovery to continue? Likely yes—trade barriers are falling all over the globe, and the trend looks set to continue. China and Taiwan recently signed a free trade agreement (FTA)—nothing short of amazing considering the long history of animosity between the two. Taiwanese exports have been growing by leaps and bounds (38.5% year-over-year in July—above expectations). South Korea indicates it's likely to "open free-trade talks next year" with China. Member countries of the fourth largest trading bloc, Mercosur (Argentina, Brazil, Paraguay, and Uruguay), recently made significant progress on a long-awaited agreement that includes elimination of double taxation on goods produced outside the bloc by 2012. (Since inception, trade among Mercosur member countries has soared—on track to total about $41 billion this year, up from $4.5 billion in 1991.)
And while the US has dragged its feet on FTAs, free trade is contagious (in a good way). The Obama administration likely won't want to fall too far behind and, indeed, has promised to get lagging FTAs (like those with Colombia, South Korea, and Panama) moving in Washington. Global trade is booming—allowing countries to maximize productivity and economic growth by specializing in their strengths and trading for what they lack. And that's very bullish.