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Supply Chain Graphic of the Week: Data Show a Wobbling Global Economy


2016 Trade Growth to Fall Below GDP Growth for One of Few Recent Times, While World GDP Continues to Trend Down

Oct. 4, 2016
SCDigest Editorial Staff

The US economy continues to demonstrate conflicting signals as to its health, with for example jobs numbers reasonably strong even as Q2 real GDP growth was revised up last week to a still anemic 1.3%.


But the US seems to be performing better than most of the rest of the world, where the data are more negative.


For example, last week the World Trade Organization downgraded its earlier forecast for 2016 global trade growth from 2.8% in April to just 1.7% now. The 2017 forecast  was similarly downgraded to a lower bound of 1.8% growth from a previous forecast of 3.6%.


What more, as shown in the chart below, world trade growth is expected to fall below global GDP growth for one of the few times in recent history. Before 2016, this scenario has only been seen in the recession years of 2009, 2002, and 1981-82. That means the ratio of world trade growth to GDP growth, generally over 1.5 since at least the ealry 1990s, has now expected to be just 0.8 here in 2016.


Source: World Trade Organization


What are the factors behind this change? There are many, most notably an overall weak global economy, plus low commodity prices, regional manufacturing strategies by multi-national corporations, and some level of increased protectionism.


Evidence of the first factor, a slowing global economy, is shown in the graphic below, based on data from the International Monetary Fund.



The trend line: not good. Forecasts are for the 2016 number to be slightly below the weak 3.1% global growth seen in 2015.


Where do we go from here? That is the critical question.


Any Feedback on our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback section below.


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