Global trade imbalances to shrink

By Trevor Williams, Chief Economist

US/China trade tensions rooted in a misunderstanding of the facts Global trade disputes have not gone away.

Even though there was significant cooperation amongst countries over the last two years to limit the effects of the recession through coordinated fiscal and monetary loosening, substantial issues around trade remain.

Friction is most apparent between the US and China, especially as China fixed its exchange rate against the US dollar in 2008.

In this weekly, we look more closely at global imbalances, concluding that, contrary to market expectations, they are likely to continue to narrow in the years ahead and that China is playing a crucial role in that process.

Recognition of this would lessen trade tensions, reducing the risk of protectionism and severe damage to all participants in the global economy that have benefited so much from its expansion in the last twenty years.

However, this may not be possible at a time that political tensions seem to be rising.

This would be a pity as the reality is that trade openness has enabled the largest reduction in
global poverty levels and increase in wealth ever recorded.

Read more (PDF, 232 kB)

* All charts are sourced to Lloyds TSB Corporate Markets Economic Research, Bloomberg, IMF and Datastream

 


What do you think?

We are interested to hear your thoughts.

We do not publish email address information, this is only to confirm and validate your comments.





Your comments

We are not able to publish all comments submitted. All comments pass through a human review process before being published online.