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Cabrillac, Bruno
Al-Haschimi, Alexander
Babecká Kucharčuková, Oxana
Borin, Alessandro
Bussière, Matthieu
Cezar, Raphael
Derviz, Alexis
Dimitropoulou, Dimitra
Ferrara, Laurent
Gächter, Martin
Gaulier, Guillaume
Hukkinen, Juhana
Keeney, Mary
Lodge, David
Mancin, Michele
Marsilli, Clement
Martínez-Martin, Jaime
Mroczek, Wojciech
Muck, Jakub
Year of Publication: 
Series/Report no.: 
ECB Occasional Paper 178
Global trade has been exceptionally weak over the past four years. While global trade grew at approximately twice the rate of GDP prior to the Great Recession, the ratio of global trade to GDP growth has declined to about unity since 2012. This paper assesses to what extent the change in the relationship between global trade and global economic activity is a temporary phenomenon or constitutes a lasting change. It finds that global trade growth has been primarily dampened by two factors. First, compositional factors, including geographical shifts in economic activity and changes in the composition of aggregate demand, have weighed on the sensitivity of trade to economic activity. Second, structural developments, such as waning growth in global value chains, a rise in non-tariff protectionist measures and a declining marginal impact of financial deepening, are dampening the support from factors that boosted global trade in the past. Notwithstanding the particularly pronounced weakness in 2015 that is assessed to be mostly a temporary phenomenon owing to a number of country-specific adverse shocks, the upside potential for trade over the medium term appears to be limited. The “new normal” for global trade can therefore be expected to look broadly similar to the weakness observed over recent years on average. In this sense, buoyant trade dynamics in the 1990s and early 2000s may have been what was exceptional, rather than the slowdown over recent years.
frictions in global trade
global trade slowdown
global value chains
trade elasticity
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Research Report
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