International commerce is stalling. The growth in exports of goods and services is this year set to fall below the overall expansion of global GDP for the first time in 15 years. Myopic politicians, ignoring the lessons of history, are succumbing to the siren calls of protectionism. The world economy is becoming more insular.
The World Trade Organization, the most important trade body on earth, just slashed its 2016 forecast for the increase in total international commerce from 2.8pc to 1.7pc – well short of its 2.2pc estimate for the growth of the world economy as a whole.
Four days into 2016, you’ve no doubt read numerous “my predictions for the new year” columns. Read mine anyway – as some the economic viewpoints below will differ from those you’ve read elsewhere.
Starting on a consensual note, I agree with Christine Lagarde, the Managing Director of the International Monetary Fund, when she said last week that the stuttering global recovery will continue to be “disappointing” in 2016.
Phhhhew, we got through the summer. So often, certainly in recent years, August has been a wicked month when it comes to financial markets. Back in August 2010, the Dow Jones index of leading American stocks lost a hefty 4.5pc. In 2011, the August sell-off was bigger, as US equities fell 5.1pc.
Last summer, of course, throughout August sovereign bond yields spiraled across the Eurozone periphery. Numerous well-manicured nails were bitten to the quick as investors fretted about one or more nations crashing out of the single currency.
Late last Tuesday, after months of intense lobbying, and campaigning visits to 47 countries, Roberto Azevedo was confirmed as the next director general of the World Trade Organisation. Amidst the Queen’s Speech and the resignation of a certain football manager, Azevedo’s appointment barely flickered on the UK news radar. Yet it was an event of some significance that could have major implications for the future shape of the global economy.
While less well-known than the International Monetary Fund, the WTO is the most important economic multilateral on earth. With 159 member states, this Geneva-based organisation can be likened to a vast and highly specialised international court, designed to arbitrate on complex trade disputes between governments that come into conflict, so as to keep protectionism in check.
Political tensions on the Korean peninsula have lately escalated. In February, North Korea carried out a nuclear weapons test, defying tighter United Nations sanctions.
Kim Jong Un’s regime has since been threatening pre-emptive nuclear strikes against Pyongyang’s enemies, the recently-installed 30-year old “supreme leader” clumsily attempting to rally the moribund population of one of the world’s most secretive states.