May 19, 2024

Off the Charts: In Euro Zone, Effects of Trade Collapse Linger

The Census Bureau reported this week that the United States exported $1.311 trillion in goods in the 12 months through February, exceeding the old record of $1.303 trillion set in the period ending in October 2008, the month after the collapse of Lehman Brothers intensified the credit crisis.

At the lowest level, in the fall of 2009, 12-month exports were down 19.8 percent from the peak. That was the sharpest decline for American exports since the early 1950s, when there was a reduction of Marshall Plan shipments that had helped to rebuild Europe after World War II.

As is shown in the accompanying charts, American imports fell further than exports in the recession and have yet to recover to peak levels.

Japanese exports have almost recovered to their precrisis peak, at least when measured in dollars, but those of Germany and Britain remain more than 13 percent below their precrisis peaks.

The most impressive recoveries have come in the export-oriented developing nations of Asia. Chinese exports fell along with those of most other countries, but they have recovered much more rapidly. China’s exports began setting new records last summer.

China’s economy continues to boom, and its imports are rising more rapidly than its exports, which could ease some of the complaints from China’s trading partners. In both India and South Korea, however, imports have not recovered as rapidly as exports.

The cases of the most troubled economies in the euro zone demonstrate the extent to which weak economies can affect trade. Countries that are suddenly poorer may or may not be able to continue exports, but their imports are likely to decline sharply.

In Ireland, imports were still falling as this year began, though there are signs they are stabilizing. Greek exports began to recover last summer, but import volumes continue to plunge and are nearly a third lower than they were at the peak in 2008. Despite that decline, however, Greece still exports only about a third as much as it imports. That is a measure of the lack of competitiveness of its economy.

All the charts are based on dollar volumes of trade, which improves comparability among countries but can paint a picture different from the one seen within a country. In Britain, exports measured in pounds are well above previous highs, but volumes measured in dollars are still lower because of the weakness of the pound. German exports, however, are still below record levels when measured in euros, as are those of the other euro zone countries shown. In Japan, where the yen’s strength may have hurt Japanese competitiveness, exports measured in yen are off more than 20 percent from record levels.

Floyd Norris comments on finance and the economy in his blog at

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