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April 06, 2018 | Brief
After almost six years of lackluster performance, global trade growth now appears to be improving. Since the end of 2016, when the global gross domestic product (GDP) growth recovery began to gain some momentum, trade growth—both in volume and value terms—has rebounded to rates not seen since 2011.1 This is, indeed, good news for businesses around the world.
However, even as 2018 global growth may well surprise on the upside, the trade recovery may not be sustainable in the medium-term. One reason is that global GDP growth is projected to be less than 3 percent in the decade ahead (see The Conference Board Global Economic Outlook, 2018). Additionally, other factors that lifted trade growth rates to unprecedented heights during the late 1990s and early 2000s are unlikely to return in full force —including the rapid integration of many emerging economies into the global economy, strong economic growth in China, and increased fragmentation of supply chains across borders.2
Furthermore, the consolidation of value chains, increased rates of manufacturing reshoring, and, perhaps, even rising protectionism may constrain long-term trade expansion.
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