Impact on export during the recent financial crisis

Thèmes abordés

Export Import Germany China Crisis subprimes world financial emerging trade partner flows

Résumé du document

The paper describes the export situation during the recent financial crisis. Since this topic is very large, it was impossible for us to cover all of its multiple aspects and we decided only to highlight a small part of it. We confine our analysis by comparing two different types of countries; one developed against one developing country to see if their trade has been affected the same or another way by the crisis. We decided to make a comparison between Germany and China, because not only they represent a developed and a developing country, but their economies are also very export orientated.

The fact that China, an emerging country, surpassed Germany as the world's largest exporter during the financial crisis encouraged our analysis too. The main questions we tried to answer are if German and Chinese exportations have been affected differently by the global economic downturn and how it has been possible for China to become the world's biggest exporter after the crisis. It is important to mention that our analysis focuses on Mainland China only, excluding Hong Kong and Taiwan.

The paper starts by giving a general impression of the worldwide export situation over the last 10 years. We try to show that trade is much more volatile than production and GDP, which illustrates why export fell by so much in 2008‐2009. The same section provides some theoretical insight of what economists think of being the main causes of the trade collapse and we show that the trade of all sorts of products has been affected by the crisis.

The paper continues by starting the main analysis, which focuses on China and Germany. The first section of this part compares total export of both countries, including a regression which shows that the crisis had an impact on export of both countries. The following section shows how export with the different trading partners of both countries has been affected and the last section does the same by comparing the different sectors in which both countries are active.

This section gives an insight into world export development since the year 2000. We will use
quarterly data to show the exact moment in time when the trade collapse seems to take its
course. The second part compares real export growth to real production and real GDP growth. Finally, we will conclude this section be giving possible explanations why the fall in trade was not commensurate with the economic recession.

Tags: Financial crisis, economic recession, world's largest exporter, global economic downturn.

Extraits

[...] (2009): “Crisis‐era protectionism one year after the Washington G20 meeting: A GTA update, some new analysis, and a few words of caution” Freud, C. (2009): Trade Response to Global Downturns: Historical Evidence”, Policy Research Working Paper 5015 Levchenko, A. and Tesar, L. and Lewis, L. (2009): Collapse of International Trade During the 2008‐2009 Crisis: In Search of the Smoking Discussion Paper No Meyer S. (2010): deutsche Außenhandel im Sog der Weltwirtschaftskrise“, Deutsches Statistisches Bundesamt, Wirtschaft und Statistik 4/2010 Mora, J. and Powers, W. (2009): “Decline and gradual recovery of global trade financing: US and global perspectives” Schrott, S. and Möbert J. [...]

[...] However, most of these economic stimulus packages have been orientated towards non‐tradable goods such as infrastructure and construction. 5 3. Main facts regarding the global trade collapse Chart 3 shows that the trade collapse seems to have affected all types of goods. In fact, the decline between 2008 and 2009 has not been restricted to some particular goods but was well spread across all sectors. The graph illustrates the enormous fall of all the different product groups affected by the financial crisis. [...]

[...] For example, during the recovery phase, Chinas iron and steel sector manages to increase by 240%, while the German sector only increased by compared to its crisis level. As already pointed out in the two previous sections, Chinese recovery is by far faster than the German one. In fact, Chinese economy is currently evolving and knows impressive growth rates since several years. Surely, these factors and the exceptional dynamism of its economy play an important role in explaining the important recovery rate of exports, but one must also account for the weak Chinese currency that might boost exports, as pointed out in the previous section. [...]

[...] The “automotive” sector experienced the sorest fall of the three represented sectors during the crisis. It is amazing to see that the drop in exports in the automotive sector is almost linear from Q until Q Exports in the “machinery” sector and in the “Electrical” sector follow a nearly parallel movement over the observed period. Compared to the Chinese model, the German exports seem still under shock: Their recovery is much slower than the Chinese one. In brief, China's and Germany's main export sectors are nearly the same; just their order of priority seems to be slightly different. [...]

[...] The fact that China, an emerging country, surpassed Germany as the world's largest exporter during the financial crisis encouraged our analysis too. The main questions we tried to answer are if German and Chinese exportations have been affected differently by the global economic downturn and how it has been possible for China to become the world's biggest exporter after the crisis. It is important to mention that our analysis focuses on Mainland China only, excluding Hong Kong and Taiwan. The paper starts by giving a general impression of the worldwide export situation over the last 10 years. [...]