Seeking Alpha

Reliance on export growth may be miscalculation

  • HSBC's chief economist Stephen King noticed something peculiar recently when he looked at growth forecasts from the firms' economists: They all cited exports as the engine of growth for the regions they covered.
  • "The impossibility of every nation being able to sell more than it buys means some of the analysts must be wrong," Bloomberg notes, pointing to Caterpillar (CAT) and Unilever (UL) as evidence that "the bet on trade is flopping."
  • Further evidence is provided by the CPB Netherlands Bureau for Economic Policy Analysis which recently said global trade volume slid 0.8% in August from +1.8% in July and by recent data which showed China's exports unexpectedly fell in September.
  • Ultimately, "the trade slowdown stems mostly from developing nations, which had powered the world out of its 2009 recession," Bloomberg says. With the IMF cutting its forecast for emerging market growth and the ADB slashing its estimates for developing Asia, choppy waters may lie ahead.
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Comments (6)
  • Gary Jakacky
    , contributor
    Comments (2743) | Send Message
     
    The idea that "exports are good" and "imports are bad" died with mercantilism, a couple centuries ago. Nowadays only Democrats and government bureacucats believe it, and of course the GDP calculations enshrine it on a quarterly basis.
    26 Oct 2013, 12:24 PM Reply Like
  • Ludo5312
    , contributor
    Comments (109) | Send Message
     
    There is obviously a big difference between export promotion and mercantilist ideas. It is even less sure how that relates to a particular political party and government bureaucracy. Inaction or a particular focus on value added products is always appreciate (or not), particularly by SMEs. A recent article in The Economist underlined that clearly that as very large companies also rely on it with the case of GE in the Czech Republic's 'shopping for a nuclear power plant'.
    One must wonder what kind of world we would live in when we would not have some reliability of trade figures in GDP calculations. Who would gather and publish this information?
    26 Oct 2013, 12:41 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2743) | Send Message
     
    With free trade buyers seek the lowest price and sellers seek the highest price. From time to time artificially drawn borders around countries will show more or less of exports or imports. Completely artificial and beholden to political demagoguery.
    27 Oct 2013, 02:56 PM Reply Like
  • wyostocks
    , contributor
    Comments (9051) | Send Message
     
    Didn't Obama promise to increase exports 15% per year.
    Oh well.
    26 Oct 2013, 12:34 PM Reply Like
  • Ludo5312
    , contributor
    Comments (109) | Send Message
     
    That was certainly exceeded in 2011 and was cumulated not far off over a 2 year period... http://1.usa.gov/16CC4Uw
    26 Oct 2013, 12:55 PM Reply Like
  • Walter P. Chrysler
    , contributor
    Comments (300) | Send Message
     
    exactly. we don't just have an export boom in the USA but an ongoing trade boom going on 40 years now. the current one is obviously in capital (again) but also in raw physical production as well (refined products from the North American energy bonanza, electronics, Boeing, autos...the list is starting to get long actually.) at some point this will be reflected in growth figures for the US economy as a whole...as it is right now however the recovery is still the worst on record "nationally." there are pockets of explosive growth however and that growth is spreading. First North Dakota, then Texas. My next pick is South Carolina. http://bit.ly/1gRx4oW 5% is pretty darn good. i think it could easily pick up to 7 or 8% actually. "must be all that gold, silver, oil and natural gas." get that growth to 7-8 percent and that does make the Governor a Presidential contender btw.
    27 Oct 2013, 12:14 AM Reply Like
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