Global economy slowdown has been experienced since 2012. It continues to slowdown in 2016 to its lowest level since the great recession of 2009. Global Trade is important component of global economy. It is further estimated to weaken in 2017.
Existing slowdown could be due to structural changes (instance: Brexit), huge debt (instance: China, Brazil), lot of competition, geopolitical uncertainties, slow-moving trends in demographics and low productivity growth. Fall in commodity prices, increase in domesticalization, and currency conflicts among the countries has further added to low growth, turnovers and stumpy trade. This is risky for commodities-related sectors and countries. Such Countries and sectors need to be digitalization for expansion and growth.
Overall this could lead to bankruptcy for many businesses and Countries. Few other reasons for global economy slowdown could be weak demand, high unemployment, contracting credit, adjusting labor costs, overcapacity in the industrial sector, lower food and energy prices.
Investment is also main resource which adds to trade growth. Investment could stimulate trade growth and strengthen productivity and vice versa. Less trade liberalization and protectionism are holding back trade growth, though the impact is limited. Trade reform is the need of the time. Like reducing the trade barriers, lessen the cost to those who face more burden of adjustment/regularization/change, liberalize policies, etc. Such more liberal and broad based policy could boost the international exchange of goods and services and encourage the global trade growth. Weak investment growth is major drawback for both advanced and emerging economies.
International Debt Collection need to be monitories by setting and/or strengthening payment practices, legal action and insolvency. Trends of trade, consumerism, investment, insolvencies and other crucial elements of GDP growth need to be scrutinized. Deep scrutiny of general and upcoming risk factor of different sectors and countries is vital.
Financial markets find more scope in emerging market economies due to lower interest rates. But it differs for different countries and regions. For illustration India is performing good whereas sub-Saharan Africa is facing slowdown. All these risks to fuel further political discontent. It is essential to amend monetary policy and global interest rate.
Bank of England governor says “monetary policy has long been overburdened and economic rebalancing is required globally. There needs to be a better balance of monetary policy, fiscal policy and structural policy. Rebalancing of policy in the UK is essential, which will be part of a rebalancing around the world. People with assets got richer, people without them have suffered, people with mortgages have found their debt cheaper, people with savings have found themselves poorer. A change has got to come and we are going to deliver it,”
The World Trade Organization presented 2016 its forecast as slow growth for the first time in 15 years and that the trade would grow more slowly than GDP.
There is a lot of inequality in World, some had benefited more than others. The government needs to set the policy which Central Banks and other Central bodies’ are suppose to implement for more comprehensive growth. Also the leaders of all countries need to boost trade by broadcasting the merits of their respective countries.