Asia and emerging countries pull world trade up

World trade figures issued by the Dutch institute CPB have been published for the month of August.
Year-on-year, the improvement observed that has started in June has been extended to August with an increase of 3.8%. This figure is still limited as before the 2008 crisis, average trade growth was 7% per year.
On the graph, however, there is a marked divergence between the pace of trade and the export order indices of the US, Japan and the Euro zone. Usually these two indicators have consistent profiles. World trade is up while the average of these 3 Markit indices continues to deteriorate. We already noted this point a month ago but it is confirmed clearly.worldtrade-August.png

The rebound in trade is mainly seen in emerging countries, particularly in Asia, but Latam and Central Europe are also on the rise. On the other hand, the situation remains weak on developed countries’ side. The trend is stable and is penalized by the pace of the USA and Japan for which the trade retreats over 3 months. The US  which has increased tariffs is paying a high price for this policy. Asia, the US target, is doing well. That’s amazing.
world trade distribution.png

world trade distribution-developed.png
world trade distribution-emerging

Are we still in the midst of a crisis?

The answer is yes…or at least that was the answer from Mario Draghi at the press conference after the September 7 monetary policy meeting, thereby indicating the importance of pursuing monetary accommodation in order to keep on supporting economic activity, despite the recent uptick in growth. However, the economy is failing to get back on the road to higher inflation and this means there is still an imbalance.

More broadly speaking, I think that the world economy is still in crisis, especially in the west, if we define a crisis as a transition period between two stable trends.
I don’t mean a financial crisis as triggered by excessive debt used to finance the acquisition of property: financial crises like the one in 2007/2008 are as old as time itself.
Beyond this financial aspect, we can identify two major sources of imbalance, which persist and keep the global economy stuck in a crisis. Continue reading