Trade outlook in context

World growth is pro­ject­ed to fall to just ½ per­cent in 2009, its low­est rate in 60 years, the IMF said in an Update to its World Eco­nom­ic Out­look, released on Jan­u­ary 28… Glob­al out­put and trade fell sharply in the final months of 2008. The con­tin­u­a­tion of the finan­cial cri­sis, with gov­ern­ment poli­cies fail­ing to dis­pel uncer­tain­ty, has caused asset val­ues to fall sharply across advanced and emerg­ing economies, decreas­ing house­hold wealth, and there­by putting down­ward pres­sure on con­sumer demand.” extract from IMF Sur­vey

True enough, the pro­ject­ed down­turn in trade in 2009 is sharp­er than any­thing most of us have ever seen. But the con­text is inter­est­ing, too. There’s been an almighty rise ahead of that pro­ject­ed ‘kink’ in the curve (click the thumb­nail to see a full-sized chart). That means—as we all remember—there has been a huge pro­duc­tion boom over the past cou­ple of decades, espe­cial­ly in devel­op­ing coun­tries and, despite the recent defla­tion marked by astro­nom­i­cal loss­es by house­holds (a lot of them on paper), the world is still rich­er to day and incomes are bet­ter dis­trib­uted than at any time in human his­to­ry.

This is not the 1930s. The base from which trade and pro­duc­tion can recov­er is not only much larg­er, and deep­er it is more diverse (sec­toral­ly) and more wide­spread (geo­graph­i­cal­ly).

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