Exports won't save the world from recession

By Floyd Norris
Published: January 17, 2009 International Herald Tribune Weekend Business

World trade, a booming source of growth for most of the past five years, is suddenly shriveling, with exports declining in almost every country as the world endures a recession.

The decline in trade, which began last summer, accelerated after Lehman Brothers failed in mid-September. In the aftermath, credit became harder to obtain for importers and confidence waned among would-be buyers of many products.

That exports are down in almost every country shows both the international nature of the recession and the fact that it has been impossible for any country to export its way out of trouble. Nonetheless, there may be protectionist efforts in a number of countries this year, aimed at improving each country's trade position at the expense of others.

China, the largest exporter in the world, reported in the past week that its December exports of $105.7 billion were down 3 percent from that month in 2007, following a 2 percent decline in November. Before that, China's official export figures had shown double-digit percentage gains in every month since March 2002.

The United States, the second-largest exporter, said its November exports of $98.1 billion were down 4 percent from a year earlier. Germany, the third-biggest exporter, reported its exports in November were off 21 percent at $96.1 billion.

For the United States, it was the first year-over-year decline in exports since 2003. For Germany, it was the largest year-over-year fall since 1993.

The figures are all in dollars and are seasonally adjusted. They are not adjusted for inflation, and some of the decline for some countries reflects lower prices for many commodities, including oil, rather than decreasing quantities of exports.

None of the eight major exporters shown in the accompanying graphic, however, get a significant proportion of their exports from oil. The declines reflect a sudden weakening of orders.

Over all, November trade figures were available for 43 countries. That is not the entire world, because some countries do not report trade in dollars and others, like Italy, Spain and Russia, have not yet reported November figures. Figures for most of the major oil exporters were not available.

Of those 43, only three reported higher exports in November than a year earlier. They were Australia, Brazil and Lithuania. The only one of those to have reported December numbers, Brazil, showed a decline that month.

Overall, the total reported exports from those 43 countries peaked in July, at $1.03 trillion. By November, the figure was down 26 percent to $766 billion. Since the figures are seasonally adjusted, the monthly figures should be comparable.

Some of the worst-hit exporters have heavy exposure to industries that are suffering. Taiwan has built a strong business in computer components. Germany is a major exporters of both cars and machine tools. South Korea also has been a substantial exporter of cars and technology products.
World trade, a booming source of growth for most of the past five years, is suddenly shriveling, with exports declining in almost every country as the world endures a recession.

The decline in trade, which began last summer, accelerated after Lehman Brothers failed in mid-September. In the aftermath, credit became harder to obtain for importers and confidence waned among would-be buyers of many products.

That exports are down in almost every country shows both the international nature of the recession and the fact that it has been impossible for any country to export its way out of trouble. Nonetheless, there may be protectionist efforts in a number of countries this year, aimed at improving each country's trade position at the expense of others.

China, the largest exporter in the world, reported in the past week that its December exports of $105.7 billion were down 3 percent from that month in 2007, following a 2 percent decline in November. Before that, China's official export figures had shown double-digit percentage gains in every month since March 2002.

The United States, the second-largest exporter, said its November exports of $98.1 billion were down 4 percent from a year earlier. Germany, the third-biggest exporter, reported its exports in November were off 21 percent at $96.1 billion.

For the United States, it was the first year-over-year decline in exports since 2003. For Germany, it was the largest year-over-year fall since 1993.

The figures are all in dollars and are seasonally adjusted. They are not adjusted for inflation, and some of the decline for some countries reflects lower prices for many commodities, including oil, rather than decreasing quantities of exports.

None of the eight major exporters shown in the accompanying graphic, however, get a significant proportion of their exports from oil. The declines reflect a sudden weakening of orders.

Over all, November trade figures were available for 43 countries. That is not the entire world, because some countries do not report trade in dollars and others, like Italy, Spain and Russia, have not yet reported November figures. Figures for most of the major oil exporters were not available.

Of those 43, only three reported higher exports in November than a year earlier. They were Australia, Brazil and Lithuania. The only one of those to have reported December numbers, Brazil, showed a decline that month.

Overall, the total reported exports from those 43 countries peaked in July, at $1.03 trillion. By November, the figure was down 26 percent to $766 billion. Since the figures are seasonally adjusted, the monthly figures should be comparable.

Some of the worst-hit exporters have heavy exposure to industries that are suffering. Taiwan has built a strong business in computer components. Germany is a major exporters of both cars and machine tools. South Korea also has been a substantial exporter of cars and technology products.