World trade sees biggest fall in 65 years, GDP declines

Lamy.jpgWorld trade fell 12% last year, its worst decline since 1945. First estimates also suggest global GDP fell 2.2%, according to Pascal Lamy, head of the World Trade Organisation. This confirms the World Bank’s fears back last March, that the global economy might shrink for the first time since World War 2.

Lamy went on to add the following downbeat assessment of the current position:

• The “freefall in trade” has been due to the “simultaneous reduction in aggregate demand across all major world economies (and) the drying up of trade finance“.
• “The positive impact of national stimulus packages is fleeting and worries are mounting over the huge budget deficits rung up by many governments.”
• “The International Labour Organization estimate the number of jobless worldwide at over 200m.”

Lamy also highlighted the importance of trade to national employment:

• “22% of total employment in Germany depends on exports“.
• “20% of US employment relates to exports of manufactured goods“.

The chemical industry is a major beneficiary from growth in global trade. So it is unlikely that we will see a full recovery in demand whilst international trade itself, and global employment, remain depressed.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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