Executive Summary
Since the turn of the century, the degree of macroeconomic changes has been significant, particularly because the global economy has grown exponentially. As indicated by Draghi, the economic profiles in the United States can be influenced by the trade agreements made miles away in China (12). This statement was meant to show how the world’s economic ties have grown strong and now more than ever economists are interested in knowing the factors that contribute towards not just a country’s economic growth but the entire region. The main issues that are currently considered as macroeconomics aspects that have been studied and discussed for years to comprehend global economics are employment and unemployment, inflation, and economic growth. According to Clark, when analyzing regional economic health, the best indicators are pegged upon the bargain powers of the household (34).
The paper presented analyzes the global foreign trade deficits particularly in terms of exports and the global economic growth performance from 1990 to 2018. Over the last almost three decades the world markets have become closely linked and changes in Macroeconomic trends in foreign trade and economic growth have increasingly had an effect on the global economy. For instance, in this paper the U.S and China’s trade war is featured to show how two of the world’s largest economies have influenced the global economic trade and development trends.
Global Export Trends (1990-2016).
International trade plays a significant role in determining the health of the global economy. As indicated by Clark, there are numerous corporate entities that are reliant on foreign consumers to increase their profits (12). Additionally, since the introduction of online shopping, the number of consumers (both individual and industrial) depend on overseas suppliers to meet their local requests for goods and resources. Nevertheless, over the last three decades, there has been a change in the trends of exports and imports as technological developments particularly the development of the internet services worldwide.
Figure 1. Trends in global export volume of trade in goods from 1950 to 2017 (in billion U.S. dollars).
Source; https://www.statista.com/statistics/264682/worldwide-export-volume-in-the-trade-since-1950/
The image presented is a of the global export volume of trade in goods from 1990 to 2017 in billion U.S. dollars. From 1990 to 2008, the global export levels were on a steady increase from 3.45 Trillion U.S. dollars in 1990 to 16.154 trillion in 2008. According to Clark, the reason for this increase can be tied down to the increase in intercontinental trade that was improved by infrastructure development (22). For instance, since 2000 to 2006, the number of record-breaking (size) ships went up by 55%; these vessels reduced exports costs by 20% leading to an increase in trade. The 2008-2009 crisis saw a drop in export because of increasing costs and reduced consumer demand. As the global economy continued to recover from the 2008 financial meltdown, the exports increased from 12.588 trillion U.S. dollars in 2009, to 15.806 trillion U.S. dollars in 2010, and 18.334 in 2011. However, from 2012 to 2014 the trend stagnated as the three years only saw an increase in global export go up by 469 million U.S dollars. In 2015, the figures indicate a drop in exports to 16. 524 trillion dollars and later 16.034 trillion dollars in 2016. There currently seems to be a surge in 2017 and 2018 as economic stability seems to be achievable in most regions of the world particularly in the Middle East, Africa, and China.
Global Export Trends (2017-2018)
As indicated from figure 1, 2017 indicated a rise in revenues from global exports a position that is supported by data presented by Rosegrant et al, indicating the mean of exports and imports, went up by 4.7%, thus marking this increase the first annual growth in excess of 3.0% in six years (12). The dollar value of commodities exports increased by 11%, while commercial services exports went up by an estimated by 8% (Rosegrant et al., 15). According to Draghi, this surge is a result of higher commodity prices additionally, it can be argued that the growth in services was somewhat linked to growth in exports of manufactured merchandises (31). From the data presented by Anderson, and Glyn Asia was the highest provider global export in 2017 after achieving an 8% growth 2016 (117). Nevertheless, it should be noted that by the end of 2017 both China and the European Union experienced political turmoil that influence the Asian as well as European region economies (Draghi, 112; Anderson and Glyn, 41). During the first half of 2018, tensions in China, Spain, Italy, and the UK led to the introduction of a number of trade-restrictive measures that covered a wide range of commodities as well as major economies particularly in the UK due to the BREXIT saga. Considering that China and the EU play a significant role in foreign trade 2018 faced a stagnating performance in exportation of commodities.
Economic Growth
Global gross domestic product is a vital pointer for global economy, which combines all separate economies globally. When analyzing at the GDP of designated global regions, it is understandable that the figures may be highest in industrialized or developed nations as compared to developing countries. Nevertheless, the WTO creates an average that is used in global statistical purposes.
Figure 2. Growth of the global gross domestic product (GDP) from 2012 to 2022.
Sources; https://www.statista.com/statistics/273951/growth-of-the-global-gross-domestic-product-gdp/
The image above is a graphical representation of the global gross domestic product (GDP) from 2012 to 2017 as well as the estimated projections to 2022. From the data presented the 2017 and 2018, the global economy grew by about 3.74% and 3.73% compared to the previous years.
Sources; https://blog.jpabusiness.com.au/blog/key-insights-for-2018
For over a century, the economic growth patterns in the global contexts have been significantly unequal. As indicated by Anderson and Glyn, since the 1960s the Asian nations such as Singapore and Taiwan went through radical economic growth that later influenced the entire Asian region. However, this growth hardly felt global (113). On the other hand, the growth of China since the early 2000s was felt throughout the world, particularly in Africa. Since the 1990s, the global economy has continuously become equated as more countries have engaged in international trade. The 2008-2009 crisis was a clear example of how different economies growth profiles have strong ties. Although, much development has been seen over the years in terms of global growth the renewed optimism about the prospects for a broad-based global recovery is growing more unlikely. According to Anderson and Glyn, the global economic growth rates have gone up by 2.5 percent over a recorded five years since 2011– 2016. Additionally, since 2016 to the current new year of 2019, the same rate has only increased by 0.4%. Nevertheless, with growth in Japan, the United States, as well as the core eurozone economies dwindling; for instance, the signs of a slowdown in the United Kingdom after BREXIT the global economic growth seems to be hampered (Draghi 45). Additionally, there is a vital as well as a coordinated break with fiscal caution in austerity most South American economies due to political unrest; subsequently, this may mean a drop in economic growth in the developing world. From the information provided, for, over the last two decades, global economic development has been unstable as regional as well as a country.
China US Trade War
Currently, China and the United States represent the two largest economy groups in the global market today. These two nations own more than 30% of the global GDP over time they have grown as rivals. After World War II, the United States grew to become the dominating economy the world’s economy; however, in 2008 China became the largest holder of U.S. debt and two years later the country’s economy was considered the second largest economy in the world (Clark, 144). Currently, the two economies are engaged in a trade war after the current U.S political class increased tariffs on selected items such as 25% tax on China electronic devices imports in the country. Subsequently, China announced that it had hit back against the US action by rising tariffs on various American merchandises, such as pork. Thus, there is a quid pro que action going on between China and the US that has led to a decrease in imports and exports amongst the two largest economies in the world thus influencing global GDP .
The global macroeconomic issues have been going through a change since the turn of the century. From the information that is provided in this study, it is clear that Economic growth, and foreign trade are the primary indicators of global economic health. From the information provided in this paper it is clear that the global GDP is currently going through a recovery after the financial meltdown in 2008, issues such as inflationary tendencies, as well as well as increase in interests on debt were negatively influenced by the 2008-2009 crisis. Subsequently, currency stabilization, as well as global based recovery, are farfetched goals due to reduced expenditure. Additionally, the crisis increased unemployment levels a clear factor that influences trade. Additionally, from the information provided it clear that unlike global economic, international trade seems to be going through a volatile period since 2008 after a steady increase from 1990. The increase in international trading infrastructure led to increased international trade in 1990s; currently, similar trends are experienced due to the growth of online shopping an aspect that clearly has opened up new avenues of trade. Nevertheless, the political and social economic turmoil in the Euro region (BREXIT in addition to finial meltdowns in Spain and Italy) as well as the slowdown of the Chines economy has seen a drop in both economic growth as well as foreign trade.
Works Cited
Anderson, Kym, and Glyn Wittwer. “Asia’s Evolving Role in Global Wine Markets.” China Economic Review 35 (2015): 1-14.
Clark, Gordon L., Maryann P. Feldman, Meric S. Gertler, and Dariusz Wójcik, eds. The New Oxford Handbook of Economic Geography. Oxford University Press, 2018.
Draghi, Mario. “Unemployment in the Euro Area.” Speech at the Annual Jackson Hole Central Bank Symposium, August. Vol. 22. 2014.
Rosegrant, Mark W., Michael S. Paisner, Siet Meijer, and Julie Witcover. Global trede projections to 2020: emerging trends and alternative futures. 2001.