MNI: Trade Growth Sustained Through U.S.-China Fight, IMF Says

Global trade keeps growing amid tension between the U.S. and China though it’s threatened by political populism and regional blocs emerging since the Ukraine war, according to a flagship IMF paper published Thursday.

“There is still no conclusive evidence that international trade is deglobalizing,” according to the paper by former World Bank chief economist Pinelopi Goldberg and Tristan Reed, an economist at the World Bank. “When measured in U.S. dollars, global trade growth slowed after the global financial crisis in 2008–09 and declined sharply at the onset of the pandemic in 2020. But since then trade has rebounded to the highest value ever,” they wrote in the IMF’s Finance and Development magazine.

The results come against announcements by G7 nations to “friend-shore” production of critical minerals and reduce reliance on far-flung supply chains. Xi Jinping and Vladimir Putin have also drawn closer together after a crude oil price cap and heavy sanctions led major companies to quit Russia. One reason trade has not been sapped is U.S.-China tariffs introduced in 2018 merely shifted the flows of products through different nations. Trade even in products directly hit by tariffs kept growing, the authors found.

While trade doors are being closed, new deals are still being developed in Africa and Asia, the authors said, including labor and common regulations. “Trade may, of course, respond with a delay to changes in the policy environment. And policy itself may lag changes in public sentiment.”