What's going on?

The World Trade Organization (WTO), the intergovernmental body that regulates international trade, significantly cut its expectations for global trade this and next year. It now expects 2016 to be the worst year for trade growth since the 2008 financial crisis! (tweet this)

What does this mean?

Slowing trade growth is both indicative of and a cause of poor economic growth. Part of the problem is that countries that are big commodity producers, e.g. Brazil, are now importing less stuff (presumably because they�re not making as much selling commodities at the current low prices and, therefore, can�t afford to buy as much stuff from other countries). But, there are also signs that restrictive government policies are preventing trade from growing as much as it could (a risk that the WTO thinks is increasing).

Why should I care?

The bigger picture: Global trade is becoming a smaller part of the world�s economy.

Historically, trade between countries has grown 1.5x faster than the overall world economy. However, the WTO expects trade to grow more slowly than the world�s economy in 2016 � for the first time in 15 years and only the second time since 1982. This, effectively, means that international trade is becoming a smaller part of the global economy, which is bad news for those who think that trade, overall, is a positive force for economic growth.



For you personally: There are lots of trade-offs with… trade.

One of the drawbacks from international trade is that it tends to lead to some jobs being moved to other countries (i.e. a manufacturing firm might move production to a country with cheaper labor). However, the result for the average consumer is cheaper products (because they are made in lower cost jurisdictions).