World seaborne trade, whilst still growing at a relatively steady pace, has seen a slightly less rapid rate of growth since 2015, compared to both the longer-term historical average, and the more recent 2011-14 period. Economists have spent a lot of time sifting through the factors that might be the drivers behind changes in trade growth. What might a look at more detailed seaborne trends add to the argument?
So, What’s The Argument?
One element of the debate has been whether the slowdown in the rate of trade growth, or at least the apparent reduction of the multiplier over global GDP growth (the so-called ‘trade beta’), has been the result of structural shifts in the emerging economies or if it is more closely related to the current sluggish performance of developed economies. Theorists suggest that the former would have a longer-term dampening effect on trade growth, whilst the latter would indicate something, that whilst still a highly negative impact, may improve with time.
Seaborne trade data could help to shine some light on the argument. The red line on the graph shows the 3mma of y-o-y growth in a basket of imports to developing nations (see notes). In 2014, imports rose 7.4%, but growth slowed to 0.5% in 2015 with China’s coal imports falling and iron ore imports growing more slowly. But China’s imports are far from stuck in the doldrums, and growth in the developing world imports featured here has bounced back to a robust 6.3% so far this year. On this basis, even with China’s economy maturing, it does not seem that trade into developing economies is settling into a period of uninterrupted weaker growth.
But what about the western world? Well, trends in North American and European consumer imports could be a useful indicator. Growth in container trade into Europe and North America averaged 4.5% in 2014, but slowed to 2.1% in 2015, with European imports falling. In 2016 so far, growth has picked up slightly (to 2.9%), but has still been fairly moderate. Maybe this supports the view that the more notable brake on trade growth is from soft developed world demand rather than sustained shifts in the developing world?
But, in reality, there are other trends in seaborne trade to take into account. For instance, growth in the energy and construction industries in some developed nations has been subdued, and European coal and iron ore imports have fallen. Box trade into some developing nations has come under pressure from low commodity prices. Supply disruptions in exporting nations have also impacted trade, especially in crude oil and minor bulks.
So, global trade growth is not in its prime, and there is debate over the relative impact of developed and developing world trends and their implications for the longer-term. At a glance, seaborne trade data might seem to point towards a bigger issue with western demand than with developing world imports. This is still painful, but the cycle might turn. But seaborne trade highlights that there are a range of other factors at play too. As ever, it is not simple, but as usual seaborne trade trends tell us something about the big debates. Have a nice day.