The Struggle to Find Export Growth Markets

After rising sharply in the 25 years before the 2008 global financial crisis, global exports have struggled to return to their pre-crisis over the past seven years, in line with the overall performance of the global economy.  This is posing a major problem for exporters around the world, as it has become increasingly difficult to find export markets that are providing the level of growth opportunities that were in place in many areas of the world in the years between 1982 and 2007.  Given the fact that most of the world’s leading economies are suffering from weak or inconsistent demand on their domestic markets, the need for exports to provide these economies with growth is as great as it has been in recent decades, thus making it imperative that the world’s leading export economies expand their trade ties with those markets that will provide above average rates of growth in the coming years.

Between the years 1994 and 2007, global exports rose by a very respectable 7.6% per year, their highest rate of growth in modern times.  This growth was driven by strong import growth in large developed economies such as the United States (7.8% annual average growth in imports) and the European Union (6.8%), as well as by the emergence of emerging exports markets with huge growth potential, such as China (16.8%), India (12.7%) and Russia (11.4%).  This strong performance by both developed economies and emerging markets allowed exporters to make gains in terms of high-end products and services as well as lower-cost goods and services, providing growth in a vast array of product and market segments.

However, this growth came to a screeching halt in the wake of 2008’s global financial crisis, with global exports declining by 10.9% in 2009, the first time that global exports had declined in a single year since 1982.  Since then, global export growth has returned, but has averaged just 3.1% over the past three years.  Over the past three years, import growth in the developed world as been anemic, as evidenced by poor annual average import growth rates in the United States (2.5%), Japan (2.3%) and the European Union (1.4%).  Moreover, average import growth rates in many key emerging markets have failed to meet expectations in recent years, including in Latin America (2.4%), India (2.5%), Russia (3.5%), ASEAN (4.3%) and even China (8.7%).  As a result, few exporters have managed to return to the level of export growth that they were able to achieve before 2008’s global crisis. 

Looking ahead to the next ten years (2015 to 2025), overall global export levels are forecast to rise to 5.1% per year during this period, a better performance than in recent years but still 50% below the level recorded in the 25 years before the global financial crisis.  Average annual import growth rates in the developed world will be a mixed bag, with the United States recording healthier levels of growth (5.2% per year) over the next ten years, but with the European Union (3.9%) and Japan (3.4%) continuing to see import demand falter due to the growing weakness of their domestic markets.  In terms of emerging markets, China’s import demand levels will fail to meet the lofty expectations set for that market in previous years, as import demand averages 6.7% per year over the next decade.  Likewise, ASEAN (5.8%) and Latin America (4.7%) will provide steadier, if unspectacular growth opportunities for exporters in the next ten years.  In contrast, India will become a much more important destination for exports in the decade ahead, with import growth in that country averaging 8.1% over the next ten years.  Overall, exporters will have to adjust to the fact that demand levels will not return to pre-crisis levels at any time in the near future.