Feature Articles
Recent Trends in Singapore’s Merchandise and Services Exports
24 November 2016
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Global merchandise exports growth has weakened in recent years
Growth in global merchandise exports has been sluggish in recent years. After rebounding strongly from the Global Financial Crisis (GFC) in 2009, global merchandise exports growth slowed between 2012 and 2014 before turning negative in 2015. Compared to the pre-GFC period of 2004 to 2008, when global merchandise exports rose at a compound annual growth rate (CAGR) of 15 per cent, global merchandise exports declined at a CAGR of 2.6 per cent from 2011 to 2015.
There are a few factors for the slowdown in global merchandise exports. The first is sluggish global growth in the post-GFC period. The second is a weakening of the elasticity of global merchandise trade growth with respect to global GDP growth during this period. The reasons for the weaker trade elasticity include the shift towards consumption-driven growth and weaker investments, especially in the US and China. Increased in-sourcing of intermediate goods such as electronics parts and components, particularly in China, has also posed headwinds to merchandise exports. The third factor is the sharp decline in global oil prices in the second half of 2014 and 2015, which in turn weighed on the nominal value of oil trade in recent years.