Magazine article Global Finance

Two Baskets, One Currency

Magazine article Global Finance

Two Baskets, One Currency

Article excerpt

Our cover story this month focuses on a littleknown fact: Global trade growth has slowed in recent years, and intraregional trade, especially in Asia, is becoming more prominent. Saying this trend is a leading indicator of globalization's end would be premature, and the rise of North-South trade flows is not new. Still, with trade so closely linked to world economic growth, the slowdown merits further analysis.

The new year opens after the Federal Reserve's first interest-rate increase in nine years and amid signs that there will be more, in a gradual path toward normal monetary policy after years of quantitative easing. In coming months we will see if the hike has any effect on the emerging markets and economies. Although the Fed's move was widely expected, it coincides with a continuation of QE by the European Central Bank and therefore opens the door for an unusual decoupling between US and European monetary policy. …

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