The World Trade Organisation released its latest forecasts for global trade on Tuesday and it is not a pretty picture. The WTO’s economists have lowered their forecasts sharply. They now expect global trade volumes to grow just 3.1 per cent this year, down from the 4.7 per cent they predicted in the spring. The main reasons for the gloom should be familiar by now: the slow recovery in those all-important developed economies and the return of geopolitical threats such as the Ukraine crisis.

This downgrade was pretty sharp from the WTO but I wouldn’t be surprised if there are more to come in the months ahead. 

Nations have negotiated trade agreements in one form or another for centuries. And for centuries economists have undoubtedly been facing the same question: Do trade agreements really matter?

The orthodox answer is obviously that they do. When you lower the barriers to trade goods flow more freely across borders and businesses, consumers and economies as a whole benefit as a result. But HSBC and the Economist Intelligence Unit are out with a new business survey that offers some interesting practical realities. 

South Korean carmakers are up in arms over Chile’s proposed bill to impose an environment tax on diesel vehicles, which is likely to hit Korea’s car exports to the Latin American country and cause diplomatic friction.

Chile is one of the key export markets for Korean automakers such as Hyundai Motor and its affilate Kia Motors, both making rapid inroads into emerging markets. Korean cars are the best-selling imported vehicles in Chile, with 30 per cent of the country’s fast-growing auto market. 

For years, the big-picture, long-term story in the global economy has been that of convergence. The dates and metrics vary but not the broad forecast: if current trends hold, then, around the middle of this century, per capita incomes in emerging economies will ‘converge’ with those in the rich world. The result: A ‘middle class’ world and vast fortunes for all those clever enough to position themselves to take advantage. But the OECD is out today with two bits of research/futurology that make clear the picture is a lot more complicated than that. And convergence may not happen as fast as many expect. The message of the first (the hefty annual “Perspectives on Development”) is that, bar China, the “BRIICS” (the Brics plus Indonesia) are likely to fall well short of seeing their per capita incomes reach the average of OECD countries by 2050. 

To see how China is managing its growing clout over trade and investment around the world, it might help to take a look at how an economic hegemon evolved in the past – Britain’s colonists in eighteenth and nineteenth-century India.

In reality, China is still in the East India Company stage of global economic strategy – opportunistic and pragmatic rather than ideological and intellectually coherent. (It is something of an irony that the one-party autocracy of China is proving itself eclectic while the open-market democracy of the US has been doctrinaire.) And while there are some signs that China’s economic statecraft is moving towards the transparent and plurilateral, most of its policies towards other emerging markets are opaque and self-interested. 

In India, summer, when the temperatures soar, is mango season. And no mango variety is as prized as the luscious Alphonso mango, often referred to as the king of fruits.

Alphonso mangoes usually sell at prices out of reach of the Indian common man, as most of the annual crop is exported to Europe, where deep-pocketed consumers are willing, and can afford, to pay more for rare tropical treats. 

By William R. Rhodes, William R Rhodes Global Advisors

Political and economic conditions are evolving in ways that could promote the onset of a new era of global protectionism. A revival of beggar-thy-neighbor policies cannot be discounted. The main cause is the continuing sluggishness of global economic growth, plus scant prospects for significant improvement.

The leading industrial economies today, five years after the financial crisis, continue to underperform. This year, GDP growth is likely to be around 1.3% in the Euro-zone, 1% in Japan, and 2.6% in the United States. 

China’s weak March trade numbers today rattled markets and raised new questions about both the extent of the economy’s slowdown and just how reliable any trade data ex Beijing is in itself these days, given the huge distortions seen last year due to over-invoicing.

But then all of that is testament to the fact that China’s monthly trade data are, for good reason, the most closely watched of their kind in the world today. Why? Standard Chartered offers a good reason in a new report, also out today: China is the first “megatrader” the world has seen since the fall of the British empire. 

The Pacific Alliance is all the rage in Latin America. As today’s FT special report shows, the members of this newly-formed free trade pact include some of the region’s best-managed and most reform-minded economies: Chile, Colombia, Mexico and Peru. These countries do not represent some kind of Platonic ideal. They suffer problems aplenty. But their governments do pride themselves on hard-nosed business dealing rather than gassy ideology. That being the case, is there a way for portfolio investors to actually trade the idea? 

While the focus in Ukraine has turned to government formation, Russia’s response, and chase-the-president, it’s worth keeping an eye on some of the economic charts.

Here’s a run down. 

Ouch. This isn’t any old deficit – Brazil has just registered its worst month ever, in terms of trade. Imports outweighed exports by $4.06bn in January, despite a weaker real that should, in theory, be giving a boost to exports.

But how bad is it really? Beyondbrics had a quick dig into the numbers. 

By Raffaello Pantucci of the Royal United Services Institute

A gentle rapprochement is under way between China and the United Kingdom. After almost two years in a diplomatic freeze, David Cameron visited Beijing last month and made an effective play for more trade. For the UK, this is a moment to recalibrate its relationship and play a role in coaxing China towards becoming a responsible international stakeholder. One route to that end is through understanding and working with China’s ‘march westward’ strategy, which has at its heart the re-activation of the ancient Silk Road linking China to Europe. 

The 9th in our series of guest posts on the outlook for 2014 is by Bhanu Baweja of UBS

Most people accept by now that growing aggregate debt in the global economy has cast a long, dark shadow on the strength and sustainability of global output. Arguably emerging markets, having de-rated in pretty much every asset class against the developed assets, are already priced for this weak ‘beta’ from global growth. However, have most investors considered the possibility that there may be negative ‘alpha’ for EM in the current mild recovery?

We find that in the developed world even where growth is improving, imports aren’t coming through at quite the pace they did in previous cycles. Having risen in a big way over the last 20 years, import propensities in EM’s big markets – the US, Europe and China – seem to have flattened out, or are falling. The ratio of growth in global trade to growth in global output used to run at 2 to 2.5 in the two decades before the financial crisis. It is now just under 1. 

“For the first time in our history, the WTO has truly delivered”. So said WTO Director-General Roberto Azevêdo on the historic signing of the Bali package.

But symbolism aside, what will Bali actually deliver? In terms of EM trade, the answer may well be: not a lot. 

Dilma Rousseff

Dilma Rousseff

It has become one of Brazil’s longest-running soap operas, or ‘telenovelas’: where is the country going to buy its new fighter jets?

Brazil has been talking about refurbishing its air force for more than a decade now, flaunting around a contract for 36 fighter jets that is seen as one of the most coveted deals in the global defence industry. While the contract itself is estimated to be worth at least $4bn, maintenance and follow-on deals would be worth even more.