CASE STUDY: The Impact of the Global Economic Crisis
on International Trade
Executive Summary
The continuing financial and economic crisis, primarily in the US and Europe, has had a
direct dampening impact on global trade flows with a concomitant impact on jobs and incomes
as national fiscal policies have swung towards austerity measures in an attempt to reduce
sovereign debt. All countries were impacted by the 2008 to 2009 recession through falling
exports, rising unemployment and thus falling incomes. Conversely, with only mild growth in
gross domestic product worldwide in 2010 to 2011, container trade expanded despite the hesitant
state of the Western economies. The linkage between the global economic crisis and the volume
of international trade, particularly in the container read consumer sector can best be illustrated by
a case study of US economic indicators.
Statement of the Problem
The banking crisis and lack of confidence in the economic system including too much
imports (trade deficit) leads to a global economic crisis that greatly affects international trade.
Point of View
The study focuses on the linkage between the global economic crisis and the volume of
international trade that can be seen on the gross domestic product and containerized imports as
well as the inventory and import volumes.
General and Specific Objectives
To determine how the trade deficit impacts the economic system of a country and to find
possible solutions that can be applied in order to resolve the crisis.
Analysis and Discussion
By observing the macroeconomic indicators we can surmise that the impact on trade has
a very short response time in countries where consumption plays a significant role. This is
certainly true for the western economies of North America and Europe. Exporting countries
probably have a slightly longer response time to an economic crisis which in itself is counter
intuitive. We can also conclude that by using the right economic indicators it is possible to
improve our ability to predict changes in the pattern of the flow of trade. Gross domestic product,
so often quoted as the foundation of forecasting, is shown to be somewhat lacking in predicting
changes in the short to medium-term. Making use of other indices, such as manufacturing,
industrial production, inventory to sales ratios and consumer confidence helps us to hone our
skills as reliable forecasters in a tumultuous world.
on International Trade
Executive Summary
The continuing financial and economic crisis, primarily in the US and Europe, has had a
direct dampening impact on global trade flows with a concomitant impact on jobs and incomes
as national fiscal policies have swung towards austerity measures in an attempt to reduce
sovereign debt. All countries were impacted by the 2008 to 2009 recession through falling
exports, rising unemployment and thus falling incomes. Conversely, with only mild growth in
gross domestic product worldwide in 2010 to 2011, container trade expanded despite the hesitant
state of the Western economies. The linkage between the global economic crisis and the volume
of international trade, particularly in the container read consumer sector can best be illustrated by
a case study of US economic indicators.
Statement of the Problem
The banking crisis and lack of confidence in the economic system including too much
imports (trade deficit) leads to a global economic crisis that greatly affects international trade.
Point of View
The study focuses on the linkage between the global economic crisis and the volume of
international trade that can be seen on the gross domestic product and containerized imports as
well as the inventory and import volumes.
General and Specific Objectives
To determine how the trade deficit impacts the economic system of a country and to find
possible solutions that can be applied in order to resolve the crisis.
Analysis and Discussion
By observing the macroeconomic indicators we can surmise that the impact on trade has
a very short response time in countries where consumption plays a significant role. This is
certainly true for the western economies of North America and Europe. Exporting countries
probably have a slightly longer response time to an economic crisis which in itself is counter
intuitive. We can also conclude that by using the right economic indicators it is possible to
improve our ability to predict changes in the pattern of the flow of trade. Gross domestic product,
so often quoted as the foundation of forecasting, is shown to be somewhat lacking in predicting
changes in the short to medium-term. Making use of other indices, such as manufacturing,
industrial production, inventory to sales ratios and consumer confidence helps us to hone our
skills as reliable forecasters in a tumultuous world.
