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THE global economy has stumbled from one pothole to the next in 2015. America’s economy slowed to a crawl during an icy first quarter. Then fears of a Greek exit from the euro area worried markets. Now attention has turned to China, where the government is fumbling to contain a stockmarket rout and prevent a hard landing. In the background another ominous trend has been developing: world trade shrank on a quarterly basis in both the first and second quarter of this year: the worst performance since the height of the financial crisis. But how significant is a decline in trade for the global economy?

Growth in world trade is generally a little faster than growth in global GDP. In the 1990s the former accelerated quickly relative to the latter. An era of what some have called “hyperglobalization” began, driven forward by a number of trends: liberalization in China and the former Soviet Union, a reduction in trade barriers and the creation of the World Trade Organization, and the expansion of global supply chains facilitated by progress in information technology. But the faster pace of growth in trade has not been sustained. Since the global financial crisis, trade has grown only fractionally faster than GDP. Both cyclical and structural factors are contributing to a slowdown.

On the cyclical side, the years of economic malaise in the euro zone are particularly important. Europe accounts for one-fifth of world GDP but one-third of trade—thanks in part to the fact that trade between EU countries is counted in the global statistics. Slower growth in China is also depressing trade. A weakening China has pushed down commodity prices, hurting the economies of commodity exporters and reducing their global consumption.

Yet at least some share of the slowdown associated with these factors should be temporary and potentially reversible. (The euro area, in particular, should be growing faster in future.) Structural impediments are a different story. Short-term wobbles aside, Chinese industry is becoming less reliant on imported components for its exports. America’s shale sector, which crimps trade by reducing American oil imports, is unlikely to disappear any time soon. What momentum there was behind the push for new trade deals has been lost. The Doha round has probably delivered all that it can, both the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership are being held up by election cycles (particularly those in Canada and America).

A continuation of the current period of slow trade growth might not presage a global recession. Many of the world’s biggest traders—the US, China, India—are not especially reliant on their external sectors for growth. However, trade plays an important part in economic progress. The standard development model still involves economies exporting primary products as their first step up the value chain. A long period of lower demand for commodities or basic manufactures would make it more difficult for low-income countries to become richer. The world economy has not yet exhausted the benefits to reducing trade tariffs and harmonizing procedures; trade could still recover through the liberalizing zeal of politicians. But with so many other economic difficulties lurking (and economic nativism ascendent) trade will struggle to find its way back on to the agenda.

(The Economist)