In the five years that the globalEDGE blog has been operating, much has changed in the area of global trade and investment. It all began when the global financial crisis came about in 2008 and this led to major changes in the global trade markets. Global trade relative to GDP plummeted around thirty percent during the financial crisis, and the crisis seemed to have come from problems such as poor trade regulation, bad credit, and poor bank strategies. There are many changes that have been made to the global economy and many challenges that have been faced in the area of global trade since 2008. Here’s a look at what has happened.
Five years ago the world entered a recession that seemed to have been caused from the burst of the housing bubble, resulting in many financial institutions losing their investments in some risky securities. There were other problems that had been going on such as sub-prime lending and risky behavior by investors and consumers. Debts got so high and when the bubble burst in some of the larger countries it caused housing prices to plummet. It launched the whole global economy into the recession and sent investors and consumers into shock for some time, further damaging the global economy.
During the recession and recovery process, emerging markets led the charge signaling a new era of international trade. There have been major improvements in the African nations with larger foreign investment coming in, and countries like China and India have improved regulations for trade in order to create a better environment for international business. Some countries were less affected by the recession than others. Australia is a good example due to its fast acting government with reforms to taxes and the security of its trade. It had been an isolated country for most of its existence and recently it has opened its doors to trade with countries like China, United States, Korea, Indonesia and Japan. These are the types of changes that countries will need to make in order to remain competitive and help boost each other’s market.
In a 2012 globalEDGE blog post from Machlin Fink, he explained the current factors that have been affecting trade as of late. By next year, developing countries are expected to outpace developed countries, and it seems in our new era of international business, emerging markets will run the show. International trade is expected to grow with looser policies in Europe and the many trade opportunities with new emerging markets.