Sluggish global trade – DB

FXStreet (Barcelona) - The Deutsche Bank team note that the weak global trade since 2012 points to a structurally lower trade elasticity of global economic growth.

Key Quotes

“Global trade stopped outperforming global economic growth at the beginning of 2012. While global GDP – still massively supported by the expansionary monetary policy of all major central banks – grew by about 3% yoy since the beginning of 2012, global trade expanded by only 2 ½% yoy.”

“The trend growth in global trade fell markedly in recent years to about the same level as the trend growth rate of global GDP of about 3% currently. This anaemic development of world trade since 2012 is caused by combination of cyclical and structural factors which suggests that the favourable factors pushing up global trade in the past are losing impetus”

“Global GDP growth slowed after the rebound in 2010/11 and has failed to gain momentum this year. Global GDP should again grow by about 3% in 2014. Especially weak global investment spending – the result of global overcapacities, weak commodity prices, elevated geopolitical risks and heightened uncertainty regarding the global outlook (EMU, China) – dampens global trade to a disproportionately large extent due to the higher trade intensity of investment spending compared to other demand components of GDP.”

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