Magazine article Global Finance

Eye on Trade

Magazine article Global Finance

Eye on Trade

Article excerpt

Global Finance: What worries you right now about international trade?

José Antonio Ocampo: There was a historic change in the trend of world trade after the financial crisis. From 1986 to 2007, exports were growing more than 7% a year in real terms. Now they are growing at 3% or less. This year international trade is stagnant, in volume terms, and contracting, in value terms. This has been one of the worst years for international trade in the postwar period. And I do not see this being recognized as a major problem.

GF: Why the decline in growth?

Ocampo: Two factors made that first period very dynamic for international trade: The fragmentation of the value chain, and trade liberalization by countries in Latin America, Asia and elsewhere. However, by now trade is essentially liberalized, so that's no longer a catalyst. And the future of value chain fragmentation, producing different parts of the same product in different places, remains to be seen.

GF; What about felling prices for oil and other commodities? Ocampo: Based on what I've seen, there are long-term cycles in commodities prices. We can say, while this is an oversimplification, that there are cycles of 10 years of strong prices followed by 20 years of declining prices. Future developments in the Chinese economy are key, whether there's a soft or a hard landing, because of the impact that will have on commodity prices.

GF; How has the fall in commodities prices affected Latin American countries?

Ocampo: In Latin America, non-oil commodity prices have been declining since 2012; oil started to decline last year. …

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