Worries Rise Over Global Trade Slump

A sharp drop in global trade growth this year is underscoring a disturbing legacy of the financial crisis: Exports and imports of goods are lagging far behind their pace of past expansions, threatening future productivity and living standards.

For the third year in a row, the rate of growth in global trade is set to trail the already sluggish expansion of the world economy, according to data from the World Trade Organization and projections from leading economists. Before the recent slump, the last time trade growth underperformed the rate of an economic expansion was 1985...

Since rebounding sharply in 2010 after the financial crisis, trade growth has averaged only about 3% a year, compared with 6% a year from 1983 to 2008, the WTO says.

Economists blame the slowdown on many factors, from China’s shift away from certain kinds of manufacturing to a decline in international investment. They also point to a dearth of major new trade agreements and the erection of trade barriers after the 2008 downturn, as well as a newfound reluctance by companies to source products and components far from home...

Few see any signs that trade will soon regain its previous pace of growth, which was double the rate of economic expansion before 2008...

This year the WTO is expected to cut its 2015 trade forecast a second time after a sudden contraction in the first half of the year...

This has been exerpted from 14 September 2015 edition of The Wall Street Journal.