Emerging markets, generally

Global protectionist threats are not over

Friday, September 3rd, 2021

During President Trump’s presidency, increasing concerns about global protectionism were clearly visible. In the meanwhile, one may almost get the impression that protectionism has become a less hot topic.

However, in reality this is not the case. Many (global) companies still consider protectionism as a big or even the biggest concrete challenge beyond acute covid-19 and the current threat of overheated (asset) markets. With the knowledge we have today, this may be a realistic scenario,

The main source for the concerns about remaining or growing protectionism is the fear of further increasing nationalism. There are different signs of this.

First, there are still no encouraging signals from the U.S. pointing at more harmonization with friendly-minded countries. Rather the opposite seems to be the case when considering the American exit from Afghanistan.

Second, there is an obvious risk that future American presidential administrations will continue to apply Trump’s “America first ” policy also with friends – at least to a substantial extent – and go on conducting trade policy in the most favorable national interest of the U.S. “America first” is – of course – a kind of protectionism as well.

Third, China – as we have seen in the past – has its own definition of “free trade”. Generally spoken, China is supporting free trade when it benefits itself from such a policy. This may be a somewhat harsh description but should be more or less correct. Or differently explained: China has its own trade and FDI restrictions when it feels that its competitive position could be jeopardized by required deregulation of trade and inward FDI. According to the European Chamber of Commerce in China’s latest survey from June 2021, market access impediments were reported by 45% of the interviewed European members  (https://www.europeanchamber.com.cn/en/press-releases/3345). China’s further superpower development does not indicate a more relaxed free trade policy in the foreseeable future. However, all this is still a scenario and should not be treated as an already well-based forecast.

But check out anyway reports from World Trade Alert for getting more information about different (emerging) countries’ stance of trade policy and affected favored products (https://www.globaltradealert.org/country/95)! India is a typical country with long-time protectionism. Sure, India has been gradually opening its commercial borders in recent years – but not consequently enough (https://www.bbc.com/news/business-47857583). Historical protectionism is deeply rooted in this mega country. Watch therefore India’s trade policy in the future!

Even the EU demonstrates sometimes worrisome protectionism. In my view, the next German chancellor – representing the largest European economy – should do everything possible to convince the whole EU about the decisive need to work more ambitiously for free trade. Since trade policy is in the hands of the EU, it should speak to a global public with only one voice. The EU should act more outside its borders and not too exclusively deal with its internal issues. This includes also future relations to China.

Time to wake up!

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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Emerging countries are still on the map

Monday, June 14th, 2021

Related to the covid-19 pandemic, I have at several occasions urged for more global vaccination solidarity – also in this blog. Really poor but also the somewhat more favored emerging countries have been for a long time – and still are – dramatically undersupplied with vaccines. Finally, the Indian drama was recognized in our part of the world. Africa was sometimes touched upon – but by far too little. Latin America was also neglected painfully – even Brazil. The following graph demonstrates that many countries and politicians really should feel ashamed https://ourworldindata.org/grapher/cumulative-covid-vaccinations-continent?country=Africa~Asia~Europe~North+America~Oceania~South+America.

If you wish, you can regularly join the updated global vaccination numbers according to the following source, also country by country https://ourworldindata.org/covid-vaccinations .

Whatever one may think politically, it cannot be neglected that President Biden has provided the emerging world with new hope and solidarity for the fight against corona. Hopefully, the mentioned numbers of additional vaccines at the G7 meeting in Cornwall can be kept alive or – preferably – be widened further.

Maybe the emerging world now also enters a new period of international multilateralism. This would be desirable and the only way forward for poor countries. We have seen too much bilateralism in the past years, mainly driven by the U.S., the UK and China.

In my view, bilateralism is also a crucial enemy for combatting the worsening global environment efficiently enough.

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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IfW Kiel launches new global trade indicator – also for emerging countries

Wednesday, June 2nd, 2021

The Kiel Institute for World Economics (IfW Kiel) has been a leading institution for research on international trade and economics for many years. A lot of interesting papers and forecasts have been published during a long time. When I recently re-visited the website of the institute, I found the official introduction of the newly developed “Kiel Trade Indicator” (KTI).

https://www.ifw-kiel.de/topics/international-trade/kiel-trade-indicator/

Description of the indicator

KTI summarizes exports and imports of 75 countries to a global index and also for the EU as a subgroup. But trade numbers for exports and imports can also be found for each of these 75 countries – with new updated numbers around the 3rd and the 20th of every month. A forecast for the following month is included.

Particularly interesting is the approach of applying algorithm with machine learning and AI in a real-time environment. Goods-transporting ships are registered when they are entering or leaving 500 ports worldwide. Furthermore, another 100 ship movements in maritime regions are added.

In my view, good transparency should be applied in the future by IfW Kiel when quality evaluations finally take place – particularly since a new and modern modeling technology is applied. How does this approach work?

Current situation somewhat dampened

Some weakening export developments compared to the previous month could be observed in May both globally (-1.4%) and for the EU (-4,7%), the United States (-2.2%), Germany (-1,7%), China (-1.0) and India (-2.4%).

The Kiel economists explain the currently slightly shrinking world trade with rising commodity prices and shortages of certain industrial products, possible also with rising costs for transports.

However, positive export numbers for June are, for example, predicted for   Italy, Poland, Germany, Spain, Canada, Japan and India – but not for the U.S. and China. Summarizing these impressions, one should conclude that world trade will remain dampened in June. But this does not rule out a more significant upswing of global trade in the second half of 2021.

 

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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