Monday, January 19, 2009

Exports Won’t Save the World from Recession

(Video: AP • Story: International Herald Tribune – Floyd Norris)

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% from that month in 2007, following a 2% 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% from a year earlier. Germany, the third-biggest exporter, reported its exports in November were off 21% 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. Read more here.