Secular versus cyclical

The divergence in trend growth is also clearly visible in trade performance.
During the 1980s growth of export and import volumes in high-income countries exceeded the corresponding growth rates in developing countries, where imports (in particular) were hindered by debt burdens and macroeconomic instability.

During the 1990s circumstances were quite similar across the two country groups, but since 2000, developing countries’ trade growth has accelerated to an annual pace of 10 percent, almost double that of the high-income countries.

The rapid increase in developing-country market share over the past 15 years means that developing countries themselves have become a driving force underlying the global trade cycle, reducing (but certainly not eliminating) the influence of high-income countries.
During the 1980s the contribution of high-income countries to growth in global import volumes was nine times as large as the contribution of developing countries.

High-income imports grew three times as fast as developing countries’ imports, and the share of high-income countries in world trade was three times as large.

During the 1990s the relative contribution of high-income countries was reduced from ninefold to threefold, already a major shift, increasing the relevance of developing countries.
But the breakthrough occurred in the current decade as developing countries became larger contributors to global imports than high-income countries.

The size in value of developing countries’ imports has risen to two-thirds that of OECD imports, and annual import growth exceeds OECD import growth by 60 percent.
Relative to the United States, where import growth has slowed sharply, the increased contribution of developing countries to global import demand is even more impressive.

This dramatic reversal in relative importance means that the direct effects of a drop in OECD import growth are still important, but smaller, than in earlier decades, even taking into account the now larger ratio of developing-country exports to GDP.
More and more, export opportunities for developing countries are shaped by import demand in other developing countries.

The combination of a pronounced slowing of imports in high-income countries and strong trends in developing countries provides a mixed picture at the global level.
Global industrial production, strongly correlated with global GDP, is slowing.

This has been confirmed by other cyclical indicators such as metal prices, though these prices rose sharply during the first quarter of 2008.
And because industrial production remains so strongly correlated with GDP at the global level, high-frequency indicators can provide a reliable proxy for global growth.

Indeed, the coming slowdown in the developing world is likely to reflect to a greater degree the direct and indirect effects of global credit tightening rather than the direct impact of slowing import demand in high-income countries.