Thursday, February 23, 2012

Dec. 2011 Sets Record for the Highest-Ever Volume of Global Trade and Global Output in History

The CPB Netherlands Bureau for Economic Policy Analysis released its monthly report this week on world trade and world industrial production for the month of December 2011.  Here are some of the highlights:

1. World trade volume increased in December by 1.5% on a monthly basis and by 2.5% on an annual basis, bringing the global trade index to a new all-time record high of 166.6 (see blue line in chart).  World trade is now 4.0% above the previous April 2008 peak of 160.2 in the early part of the U.S. and global recessions.  

2. By region, annual export growth was led by the United States at 8%, followed by 6.2% export growth for Central and Eastern Europe and 5.2% for Latin America. 

3. World industrial output increased by 1% in December from the previous month and by 3.8% on an annual basis, reaching a new all-time high of 145.2 (see red line in chart), with especially strong annual output growth in Asia (8.85%) and emerging economies (7.1%).   Output declined in both Europe (-1.25%) and Japan (-2.75%) on an annual basis.

4. World output is now 7.6% above its pre-recession level and 23% above the recessionary low in March 2009. 

Bottom Line:  Both world trade volume and world industrial output ended last year at record high levels in December, providing more evidence of a global recovery last year from the 2008-2009 recession.  The economic weaknesses in Europe and Japan were more than offset by especially strong trade and output growth in the U.S., Latin America, Asia, and Central and Eastern Europe.  In an important economic milestone for the global economy, the year 2011 ended with the highest-ever volume of global trade in a single month and the highest-ever monthly amount of world industrial output in history.    

Update: Based on this explanatory note, I think the world trade volume series is adjusted for inflation, see the formula and discussion on page 6.  

12 Comments:

At 2/23/2012 9:31 PM, Blogger kmg said...

Large countries like India still have very small trade volumes, and have yet to ramp up. The upside is still high even from these levels.

 
At 2/23/2012 9:47 PM, Blogger VangelV said...

This is another joke played on the economic illiterates. The simple fact is that much of this 'growth' is just understated inflation and government misallocation of resources that is not properly measured.

 
At 2/23/2012 10:55 PM, Blogger Benjamin said...

Boom times coming. The Fed, ECB and Bank of Japan are constipated, but loosening up.

 
At 2/24/2012 8:53 AM, Blogger Jon Murphy said...

It's good to see world trade volume is at a record high. Reading the report, it looks like the emerging economics are out preforming the developed economies (no surprise there).

 
At 2/24/2012 12:05 PM, Blogger morganovich said...

i'm a little unclear on this.

is this a real or nominal figure? i read the release, and it's not clear to me.

however, i found page 3 VERY interesting.

it shows price increase in trade goods per unit.

whole world: 13.3% last year

US: 11.2%

world manufactures: 9.2%
energy: 31.4%
other raw materials: 18.2%

the "inflation is dead" crowd ought to take a hard look at this. this is what is actually going on if you don't weight and hednocially adjust all the inflation out of the figures.

so, goods traded by the US are up 11.2%, but our inflation is 3% and our gdp deflator is 0.8%?

yeah, right. just our trade goods added more than 0.8% inflation.

we do about 4tn in trade and 14.5tn in gdp. .27 X 11.2 = 3%. thus, just trade goods account for ALL reported inflation, which anyone who uses healthcare, rents, buys food, etc knows to be untrue.

inflation is here and it's high.

these numbers line up pretty well with the old CPI calculation.

the divergence from credible price data like this and that from the census bureau and the BLS and BEA is getting staggering.

 
At 2/24/2012 1:49 PM, Blogger Jon Murphy said...

is this a real or nominal figure? i read the release, and it's not clear to me.

Looking at the release, it doesn't specify with prices whether they are real or nominal, so my gut reaction is to go with nominal.

 
At 2/24/2012 2:03 PM, Blogger juandos said...

How are the world trade volume actually being measured?

By monetary amounts or by actual units moved?

 
At 2/24/2012 2:08 PM, Blogger VangelV said...

Benji: Boom times coming. The Fed, ECB and Bank of Japan are constipated, but loosening up.

morganivich: so, goods traded by the US are up 11.2%, but our inflation is 3% and our gdp deflator is 0.8%?

See Benji's comment above. He confuses a crack-up boom for wealth creation and good times. I hope that you have taken the opportunity to get some exposure to the PMs. In the end they will be the only bubble standing as the world's currencies will have to be backed by something tangible.

 
At 2/24/2012 2:11 PM, Blogger morganovich said...

jon-

if it's nominal, and i think it is as i dug down and looked at sourcing for US data and it was from the census bureau whose data i know is nominal, then this is showing a real decline.

the last 3 month period compared to the like period a year ago showed 5.6% growth.

prices were up 13.3%.

that's a very dramatic real drop, so sharp i am wondering if i'm looking at it the wrong way, though i guess energy is the biggest deal there, so it's possible.

http://www.cpb.nl/sites/default/files/cijfer/CPB%20World%20Trade%20Monitor:%20December%202011/cpb-world-trade-monitor-december-2011.pdf

p3.

take a look.

interested in your thoughts.

could real trade really be contracting that much?

 
At 2/24/2012 2:33 PM, Blogger Mark J. Perry said...

See updated link in the post, I think the trade volume series is adjusted for price changes, and measures real trade volume.

 
At 2/24/2012 2:56 PM, Blogger morganovich said...

mark-

ah, thanks.

somehting did not seem right about real trade actually declining so sharply.

however, this does mean that about 70% of nominal trade growth is coming from inflation worldwide.

that does seem to cast some real doubt on the "low inflation" thesis.

how can US prices be up less than 1/3 of the prices of the goods we trade? (which are up >11%)

just the prices of our traded goods are up that much weighted as a % of the economy.

realistically, you'd need to weight them far more as we export corn, but also consume it here. we import cars, but also produce them here.

if the price movement in traded goods holds for the prices of such goods that we produce here as well (and i see no reason that it should not) then it ought to have a 50-75% weighting, making it very difficult to get to inflation numbers under 6% for the US economy and easy to see numbers more like 8% which is where the old cpi methodology would read.

 
At 2/24/2012 3:08 PM, Blogger juandos said...

Thanks for the newer link Mark...

 

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