Doha – Mubasher: Global growth fell to its slowest rate since the financial crises in both value and volume terms, Qatar National Bank (QNB) said Sunday in a report.
QNB said that the first six months of 2016 saw the slowest growth rate in global goods trade volume, averaging 0.1% year-on-year.
The report mentioned three reasons behind the slowdown in the global trade growth, topped by the downturn in aggregate demand emanating from advanced economies.
Advanced economies’ real gross domestic product (real GDP) growth fell from an average of 2.6% per year from 2000 to 2007 to an average of 1.6% from 2011 to 2015.
Secondly, the influence of structural reforms in China. Chinese authorities have enacted policies aimed at increasing the on-shoring of production and rebalancing away from the import-intensive investment and export sectors to foster consumption-led growth.
Since China accounts for 10% of global goods imports, the impact of these policies will directly slow trade by lowering Chinese imports of capital and intermediate goods.
The report suggested that there will also be indirect effects by weakening China’s demand for exports from other Asian countries who depend on linkages to China through global value chains (GVCs) and commodity exports.
According to the International Monetary Fund, Chinese import growth declined from an annual average of 13.1% over 2006 to 2011, to 6.1% from 2012 to 2015, of which approximately half was attributable to China’s economic rebalancing. The remaining portion of the decline reflects the weakness in aggregate demand.
The third factor has been the rise of protectionism and slower rate of trade liberalisation. Despite numerous pledges to support trade from the G20, including their most recent meeting in June, member states have increasingly been enacting protectionist measures.
