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Globalisation is slowly dying

Jul 25, 2016, 14:18 IST

REUTERS/Stefan Wermuth

The globalisation trend is starting to reverse.

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The idea that companies should be able to do business across continents unrestricted by national governments is falling out of favour with politicians.

To survive, globalisation needs international trade agreements. But, with global economic growth stuck in neutral, voters are becoming increasingly sceptical.

This is sapping political energy from continent-wide deals such as the Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership.

And it looks like the slow death of globalisation could start to to quicken.

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Republican presidential candidate Donald Trump said he would seek to take the US out of the World Trade Organization, while negotiations between Britain and the European Union following the Brexit vote may put London's financial services passport at risk.

Even without these sudden lurches to populism, international trade is on the decline.

Here's the chart from HSBC:

HSBC

Here's what HSBC analysts, led by US economist Kevin Logan, have to say:

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"Even before a new president is inaugurated in the US, recent G20 developments are not encouraging: over the past nine months new trade-restrictive measures have been put in place at the highest rate since 2009."

And here's that G20 chart that shows trade-restricting policies on the rise:

HSBC

HSBC takes a dim view for the prospects of the global economy if this strangling of international trade isn't reversed (emphasis ours):

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"As a guide to the missed opportunity that this represents, according to international business representatives of the B20 Trade Taskforce the reversal of all of the trade restrictive measures implemented since 2008 could boost global GDP by $423 billion a year and support 9 million jobs. The current US campaign policy proposals make it very hard to be optimistic that this will materialize."

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