Growing economic imbalances threaten growth

One of the biggest threats to the sustainable expansion of world trade is “growing global economic imbalances, heightened social and environmental fragilities and persistent financial instability, turning at times to outright crisis,” according to Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development (Unctad). Shipping lines and other suppliers along the logistics value chain will continue to face the challenges of post 2008 overcapacity, according to the report. “Mirroring economic activity, international trade remains lacklustre. With the volume of merchandise trade increasing at a rate slightly above 2% in 2012, 2013 and early 2014, the growth of international trade was even below that of global output,” says the report. Higher fuel costs are also having an impact on trade flows. According to the report, manufacturing is moving back to the industrialised countries. “The benefits that developedcountry enterprises reaped from offshoring have declined as a result of higher transportation costs following the rising price of oil since the early 2000s. “This may reinforce tendencies towards reshoring manufacturing activities back to developed countries and efforts in those countries to strengthen their own manufacturing sectors,” it says. This will help some of the economies in South Africa’s traditional European market. The report predicts a “slight pickup” in the European Union, where a tentative easing of fiscal austerity and a more accommodating monetary policy stance, notably by the European Central bank (eCb), has helped pull demand growth back to positive territory. In countries such as the United Kingdom household demand is being supported by asset appreciation and the recovery of consumer and mortgage credit, and in others such as Germany by improvement in real wages. INSERT 2% The increase in merchandise trade in 2012, 2013 and early 2014.