Congrats Anti-Globalists! World Trade Just Logged Its First Full-Year Decline Since The GFC

Global trade volumes fell in 2019 for the first time since the financial crisis.

I could just leave it there and let readers fill in the details, but I’ll regale you. That’s why you’re here, after all.

According to the CPB World Trade Monitor, trade volumes contracted 0.4% last year. This comes as no surprise, but it’s worth mentioning not only for what it says about the pernicious effects of backsliding into protectionism, but also because it’s yet another reminder that the global economy was already on shaky footing before the coronavirus outbreak upended forecasts starting late last month.

Again, there’s no mystery here. The world is turning back the clock, increasingly prone to nationalism, border controls, mercantilism and a protectionist bent that, while perhaps beneficial for small pockets of voters in western democracies where an aggrieved middle class longs for a bygone era, is objectively bad from a utilitarian perspective.

That’s not to say we should ignore the middle class in developed economies or pretend as though globalization hasn’t had deleterious side effects. But it is to reiterate that, on balance, globalization, open borders and free trade serve the broader interests of humanity, especially from an economic point of view.

“Clearly, COVID-19 is likely to slash world trade in this first quarter [although] the overall impact for 2020 will depend on the rebound once the virus is under control”, ING said Tuesday, commenting on the news, and adding the following:

South Korean factories have followed those in China which have closed in an effort to contain the virus. Factory shutdowns have led to a significant decline in shipping movements. According to Alphaliner, 46% of the scheduled shipping lines between Asia and northern Europe have been cancelled. This will not only weigh on 1Q trade growth but will also disrupt it in the second quarter since most of these ships were due to arrive in the course of March and April in western Europe.

No matter how expeditious it may be from a political perspective, the de-globalization push will, at best, prove to be a misguided experiment in nationalism. At worst, it could produce results that are wholly nefarious if the line between nationalism, jingoism and xenophobia becomes too blurry.

Of course, the same political opportunists who sought to capitalize on the plight of working people by disingenuously suggesting that ending globalization will solve the problems of middle class workers in advanced economies, are now shamelessly exploiting the epidemic for the same political purpose.

Right Peter?…