Qatar National Bank expected a decline in international trade growth rates in the future and the difficulty of achieving economic integration between countries, due to the increase in geopolitical tensions, the exhaustion of trade liberalization based on reducing customs tariffs, and the emergence of new dynamics of development in China, indicating that strong trade expansion is a thing of the past.
The bank stated, in its weekly report, that the significant expansion in international trade of commodities was one of the pillars of the global economy during the past fifty years, and was a major driver of growth and led to great economic benefits represented in lower prices for consumers and increased productivity around the world, but when viewed as a percentage Of global GDP, the progress of trade appears to have stalled since the global financial crisis of 2008-2009, prompting the question whether global commodity trade has peaked. The report added that the period of structural factors supporting global trade growth has long ended, and the new factors point to more headwinds in the near future.
He pointed out that the strong growth was strengthened in the international trade of commodities before the global financial crisis due to various factors, represented by the significant progress made in the field of trade liberalization and the conclusion of many regional trade agreements in the nineties of the last century, and the contribution of the economic development process in various countries to the growth of trade, in addition to To the development of electronic payment systems, which reduced the costs of international trade transactions, making participation in global markets within the reach of companies, and those systems enhanced access to information, which facilitated access to more distant markets and suppliers.
The report indicated that in light of these developments, global value chains (GVC) emerged, as production began to take place in several stages across different countries, indicating that global value chains had a multiplier effect on trade volumes, as each unit of exported products requires inputs. and unfinished products to cross borders multiple times. For example, making a popular phone requires components from suppliers in 43 countries, which in turn requires intermediate inputs from various sources.
And the report continued: With regard to trade liberalization, there is now limited scope for additional reductions in tariffs, while reducing tariffs was an important driver of trade growth in the past, especially through the integration of middle- and low-income countries into the global economy, the average rate of tariffs currently applied Low in both developed economies and emerging markets". He pointed out that there is no great political desire to further reduce tariffs, which are currently considered low, as this will mostly affect sensitive sectors, such as those related to agriculture and national security.
And he considered that the process of economic integration that took place in previous decades is now threatened by geopolitical tensions and increased trade protectionism, as the ongoing conflicts between the United States and China that began in 2018, followed by the Russian-Ukrainian crisis, led to an increase in trade barriers, sanctions and technology bans.
In this context, the report referred to the issuance by the US Department of Commerce late last year of an exceptionally wide set of measures banning exports of semiconductor chips and other high-technology equipment to China, moreover, protectionism appeared even in trade relations between allies, for example The American Inflation Reduction Act (IRA), approved in the middle of last year, provides direct support to industries that are fiercely competitive with European companies, placing effective barriers to foreign companies operating in the American market.
The report suggested that the factors associated with economic development would contribute to the slowdown in the relative importance of trade, as structural transformation is considered one of the hallmarks of growth, according to which the share of services in the economy increases compared to manufacturing and agriculture, as this process naturally reduces the weight of trade in the economy, citing the decline in trade levels in China. , which accounted for 64 percent of its GDP at the peak of 2006, is down to less than 40 percent now, close to levels prevailing in "mega economies" Like the United States, which amounts to about 25 percent, and given that China is working to rebalance its growth model by increasing domestic consumption, rather than exports, this process will accelerate in the coming period, reaching the rates recorded in the United States.
