Economic activity not in line for quick recovery, says Berg

Global trade has been growing for decades – but, owing in no small part to faltering economic activity, there was “a significant decrease” in 2015 that is likely to be replicated in 2016, says Dieter Berg, IUMI president, in the association’s new newsletter IUMI Eye. “Any hope of a quick recovery is doubtful due to a strong increase in protectionist trends in western countries – such as US President Trump’s threat to introduce import tariffs”, he says.

The International Monetary Fund (IMF) has noted that since 2009 there had been a continuous increase in protectionist measures, with a rapid upsurge since 2012. Berg says that “more than ever free trade agreements are currently in jeopardy, particularly in Europe and USA, where there is a political trend to blame globalization for domestic problems, strengthening populist movements and an upsurge of nationalism”.

Berg says that free-trade agreements have created many opportunities for almost all countries over the past few decades and that “the international division of labour and cross-border production processes have become core to the modern global economic order”. He accepts that globalization is not profitable for everyone, but replies that heightened protectionism is not the answer. “When it comes to protectionist measures it is often the developing countries that lose.”

On the plus side, stronger growth in the US, a probable end to the recession in Brazil and Russia, and a recovery in other commodity exporting countries due to higher prices should accelerate global trade in 2017, says Berg, but he fears that all this upside could be countered by a rising move towards greater protectionism.

“Free global trade and the global exchange of goods is the foundation for growth and prosperity across the world economy. Going back to nationalistic isolation and protectionism is likely to have a negative impact on all those involved – industrial countries, emerging markets and developing countries – including global marine insurance.”