The Financial Times’ Big Read feature on hidden trade barriers included a chart showing the growth in trade relative to the growth of the world economy. The graph showed, accurately, that trade is now growing a bit more slowly than the world economy.
The question is why.
A relatively simple adjustment helps answer the question.
Look at a plot of import growth (goods only in this graph, but it doesn’t change if you use goods and services) against growth in the advanced economies, using the IMF’s WEO data set.
And now consider the same plot for the emerging economies.
Eyeball economics tells us that import growth has really slowed in the emerging economies, both absolutely and relative to growth. 2015 emerging market import growth sort of look like 1998, and that wasn’t a good year for the emerging world. Advanced economy imports by contrast grew a bit faster than overall growth. Much more sophisticated economics tells a similar story.
Europe is actually pulling its weight here. Eurozone imports have picked up along with the modest revival in eurozone demand over the last couple of years. The problem in the eurozone is that the demand recovery has been weak more than anything else.