Strength in Numbers

As a report in the New York Times (http://www.nytimes.com/2009/04/11/business/economy/11charts.html?ref=world) indicates, the level of world trade has suffered due to the economic downturn. What is so newsworthy about a slowdown in global trade due to an economic recession? Do we really need another negative story about something everyone would expect to be the case? Actually, if you look hard enough, there are some positives to be found.

The New York Times article points out some positives in the global trade numbers. The first is that there is an indication that China’s stimulus is increasing internal demand. That internal demand is translating into increased imports into China. The hope is that by importing, other economies will get a boost and they will start to import more. This will then lead to a floor, and then an improvement, in global trade.

Another positive aspect of China’s trade numbers is that it indicates a level of economic integration with other countries that were not there a decade ago. In addition, there is reasonable speculation that China is starting to get enough of a consumer class that they can help drive the world’s economy, i.e. they are consuming more of the world’s goods.

The other good piece of news is the American export numbers. February America’s exports showed an increase over January’s export numbers. This is important for two reasons. First, the faster the world’s largest economy starts recovering; the fast the world’s economy will recover. The other reason is that our increase in exports while most other countries exports are still falling shows strength in the quality and types of goods we produce.