Is globalisation reversing? No, but it has lost dynamism, notably in the case of trade, the motor of global economic integration for decades. The question, however, is why trade’s growth has fallen. Is it because the world economy has slowed? Is it because of the exhaustion of certain opportunities? Or is it because of protectionism? The answer, suggests the International Monetary Fund in its latest World Economic Outlook , is “yes” to all three hypotheses, to varying degrees.

Between 1960 and 2015, world trade grew at an average rate of 6.6 per cent, in real terms, while output grew at an average rate of 3.5 per cent. Between 2008 and 2015, however, average annual growth of world trade was just 3.4 per cent in real terms, while world output grew at 2.4 per cent. Not only has the growth of trade slowed, but the gap between trade growth and that of output also fell sharply. (See charts.)

The IMF concludes that the weak growth in trade volumes is largely a result of the synchronised economic slowdown in advanced and emerging economies. It also adds that, “Among goods, trade growth fell for 85 per cent of product lines, with the sharpest slowdown observed in trade in capital and intermediate goods.” The post-crisis slowdown in investment was therefore particularly significant, the IMF argues, because it is relatively import-intensive. This shift in the composition of global output helps explain why the slowdown in world trade was proportionately bigger than in output. In all, “up to three-fourths of the decline in real goods import growth between 2003–07 and 2012–15 can be traced to weaker economic activity”.