Bloomberg.- The more-pessimistic outlook for commerce is likely one reason the International Monetary Fund is preparing to cut its 3.3% forecast for global growth this year when it holds its annual meetings in Lima next week.
Behind the latest deceleration in trade are the slowdown in China and fellow emerging markets, upheavals in commodity-rich nations and a rising dollar.
Still, structural shifts are playing a part too as countries including U.S. and China rely on increased production at home and fewer trade deals are struck, suggesting globalization may have peaked.
There is some hope. Credit Suisse Group AG economists say that even though they are export-dependent, the euro-area and Japan have navigated the trade weakness well thanks to their production of high-tech goods and falling exchange rates. The WTO predicts an acceleration in trade next year to 3.9 percent.
A report by research firm Gavekal Dragonomics also suggested there may be a new phase of globalization led by services and innovative companies in the advanced nations rather than multinationals and eastern Asian economies.
Slice of PieStill, if trade does fail to pick up Adam Slater, an economist at Oxford Economics Ltd., predicts continued downward pressure on bond yields and renewed efforts by countries to devalue their way to prosperity.
"The temptation to try to grab a bigger slice of a given trade pie is likely to increase," said Slater.
Just what that would achieve is in in doubt. The IMF this week suggested a 10 percent cheaper currency can boost exports by an average of 1.5 percent of GDP. By contrast, the World Bank recently estimated that falling currencies were only half as effective in increasing exports between 2004 and 2012 as they were in the prior eight years.
With emerging markets increasingly trading with each other it may be "the case that rather than the net outcome being a zero, the overall impact of currency depreciation may actually be a negative-sum game," HSBC Holdings Plc economists Janet Henry and James Pomeroy said in a report this week.