The global economic downturn since 2008 has highlighted the vulnerability of economies dependent on exports. Following the 1997-98 Asian financial crisis, some countries enhanced their exports to reduce their reliance on foreign venture capital.
In the 2008-09 global economic downturn, however, export-dependent countries were the most severely affected. Governments are implementing massive stimulus packages in an effort to boost domestic consumption to counter falling export demand.
|% of GDP|
Source: Euromonitor International from International Monetary Fund (IMF), International Financial Statistics.
- Following the worsening of the world financial crisis since September 2008, global annual real GDP growth slowed to 3.1% in 2008, compared to 5.1% in 2007. Global real GDP is likely to fall by 1.4% in 2009 over a year earlier. Trade is an important indicator to track during an economic recession as when output falls, trade usually falls faster;
- Annual real growth in world merchandise exports slowed correspondingly to 2.0% in 2008, compared to 6.0% in 2007 and 8.5% in 2006. As global demand continues to plunge, world merchandise exports will likely fall by 10.0% annually in real terms in 2009;
- The contraction in developed countries will be severe with merchandise exports falling by around 14% in 2009 over a year earlier. Developed countries in Asia will be particularly affected, as they boosted their exports following the 1997-98 Asian financial crisis. However, in Q2 2009, developed economies in Asia started to emerge from recession without exports recovery, largely as a result of the end of inventory unwinding and large government fiscal stimulus plans;
- In emerging and developing countries, merchandise exports will likely shrink by around 7.0% in 2009, causing their annual real GDP growth to slow to 1.5% (from 6.0% in 2008). Faster recovery from the downturn in the developing world has resulted in many analysts suggesting that emerging economies have decoupled from the world economy and dependence on demand from the west;
- As the exports-to-GDP ratio takes re-exports – that is, the exports of foreign goods in the same state as previously imported – into account, countries such as Luxembourg, Hong Kong and Singapore, where re-exports are significant, often see their exports greatly exceeding GDP. These countries will see their real GDP contract by 4.8%, 4.5% and 10.0% respectively in 2009 over a year earlier.