After the fall (The Economist)

July 27, 2009 -- World trade has been one of the worst casualties of the global economic slowdown and the source of some particularly startling figures. Towards the end of last year trade all but collapsed. According to the World Bank, the value of exports from a sample of 65 countries accounting for 97 percent of world trade rose 20.2 percent in September, compared with a year earlier. But by November exports were worth 17.3 percent less than a year earlier, before slumping by a whopping 32.6 percent in the year to January. In March the managers of South Korea’s Busan port, long one of the world’s busiest, said that it had run out of space to store nearly 32,000 empty containers. The Baltic Dry Index, which measures demand for the ships that transport bulk goods such as iron ore or coal, fell from 11,793 at the end of May last year to a pitiful 663 in early December.

Estimates by the World Trade Organisation suggest that trade volumes will shrink by around a tenth this year. But recent figures from big economies give reasons to hope that the worst of the slump may now be past. Even in May, the value of trade was nearly a third lower than a year earlier. But the recent awful figures mask the fact that exports and imports have held more or less steady since January.

Month-on-month changes in exports give a better sense of the decline, and these point to a slump in trade that was particularly dramatic at the turn of the year but which has since hit bottom. The World Bank estimates that the value of exports for the 44 large economies (which together account for three-quarters of world trade) plunged 7.4 percent in October and then 15.4 percent in November, before holding steady in December and then shrinking another 12.2 percent in January this year. Since then, however, the value of trade has more or less held steady.

Other indicators have also improved, though they are still well below pre-crisis levels. The Baltic Dry Index has recovered from its pitiful low, creeping back up to 3,345 on July 24th. The monthly import cargo volume at big retail container ports in America exceeded 1m TEUs (twenty-foot equivalent units) for the first time in four months during May, according to the National Retail Federation.

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