WTO’s Stark Warning On Global Trade: “The Timing Belt On The Global Growth Engine Is Off”

One narrative we’ve built on this year is that the subpar character of the global economic recovery isn’t just a consequence of a transient downturn in demand from China whose transition from an investment-led, smokestack economy towards a model driven by consumption and services has effectively caused the engine of global growth to stall. Rather, it seems entirely possible that an epochal shift has taken place in the post-crisis world and the downturn in global trade which many had assumed was merely cyclical, may in fact be structural and endemic.
We touched on this in ‘Emerging Market Mayhem: Gross Warns Of ‘Debacle’ As Currencies, Bonds Collapse,’ when we highlighted a WSJ piece that contained the following rather disconcerting passage: ‘Central to this emerging-market slump is the unprecedented weakness of world trade, which has now grown by less than global output for the past four years, unique since World War II.’
This echoes concerns we voiced in May, when BofAML was out warning that if ‘wobbling’ global trade turned out to be structural rather than cyclical, ‘then EM economies should not count on meaningful demand boosts coming from above-trend growth in DM.’

This post was published at Zero Hedge on 09/15/2015.