Trade advances at a slow pace globally - report

In the years 2012 and 2013, the global trade expanded by less than 3.5%, which is well below the pre-crisis average annual rate of 7%, holding back developing country growth, according to the Global Economic Prospects report issued by the World Bank.

Weak demand, mainly in investment and consumer demand, is one of the main causes of the deceleration in trade growth. With high-income countries accounting for some 65% of global imports, the weakness of their economies five years after the crisis suggests that weak demand continues to adversely impact the recovery in global trade. Specifically, world trade has become less responsive to changes in global income because of slower expansions of global supply chains and a shift in demand from trade-intensive investment to less trade-intensive private and public consumption.

The pointed out long-term factors affecting trade will also shape the behaviour of trade flows in the coming years and the expected recovery in global growth is not likely to be accompanied by the rapid growth in trade flows observed in the pre-crisis years.

Weakness in global import demand has contributed about 1% to the reduction in the growth in global trade. In 2013, global GDP was about 4.5% below its pre-crisis trend. There are two factors which have contributed to declining sensitivity: the rapid integration of global supply chains (which had triggered rapidly rising shipments of intermediate goods across borders) and the great recession. The latter implies recovery in investment, which has particularly large import content, and has delayed other demand components (consumption and government expenditure.