Solid growthConjoncture in France - June 2017

Vladimir Passeron - Dorian Roucher - Clément Rousset - Anne-Marie Stoliaroff-Pépin

An analysis of the current situation and short-term outlook of the French economy and France’s international environment, comprising two analysis reports, twenty-one thematic data sheets, and a number of special focuses on topical matters. For this June 2017 issue, the forecasting period runs to Q4.

Consulter

In 2017, the trade openness ratio of the global economy would appear to be recovering at last

David Berthier, Brieuc Monfort and Anne-Marie Stoliaroff-Pépin

In 2016, growth in world trade slowed once again (+1.5% in real terms after +2.5%), reaching its lowest rate since the 2008-2009 crisis. Since 2012, world trade has grown on average by 2.7% a year, compared to 5.9% a year between 1986 and 2011. It has therefore increased slightly less quickly than world activity over the last five years (+3.0% on average), whereas it was growing almost twice as fast before the crisis. The trade openness ratio, calculated as the ratio of imports to economic activity, has thus fallen slightly since 2011, after following an upwards trend over the two decades preceding the recent major crisis.

Several reasons can be proposed to explain this dip. It could be an effect of the composition of final demand: the slowdown in items with a high import content, in particular corporate investment, may have had a negative effect on trade. There could also be an effect of the geographical composition of world growth, with the most open zones having experienced the largest slowdown. Finally, the trend towards greater trade openness may have been reversed because world economies are no longer participating to the same extent as before in the process of international production fragmentation. These explanations are not mutually exclusive and go beyond a simple opposition between cyclical and structural factors.

A modelling exercise based on a set of international macroeconomic panel data on 19 countries makes it possible to quantify the effects of these different factors. For all these countries, the dip in the openness ratio since 2011 would thus appear to be due above all to a halt in the process of international production fragmentation, which seems to explain about half of it. A second significant factor, the change in the geographical composition of trade, is thought to explain a little over a third of the dip in the trade openness ratio. The effect of the composition of demand on the openness ratio, on the other hand, is thought to be weaker.

The model suggests that a recovery in the trade openness ratio could occur in 2017. The contribution of the process of international production fragmentation looks as if it will be less unfavourable to the openness ratio, as suggested in particular by the recent upswing in processing trade in Chinese customs data. In addition, world activity is expected to accelerate in 2017, in particular corporate investment, leading to a strong rebound in global trade.

Conjoncture in France
Paru le : 20/06/2017