Global trade has collapsed like never before in recorded history.
By now we’re all aware that the economy is bad, but it’s sometimes hard to grasp the magnitude of what happened.
Luckily, economist Richard Baldwin at VoxEU has put together an amazing presentation detailing how the wheels came off the global economy.
It shows just how the global collapse unfolded at the speed of light.
But the velocity of the collapse was even worse. Trade fell faster than even during the Great Depression.
While commodity prices came crashing down, prices for manufactured products actually held the line and were more defensive.
The trade collapse was so bad since today many traded products aren't necessities. Thus there was a lot of buying people could cut back on.
The West had a financial crisis, everyone else only had a trade crisis. Thus they're much better positioned to recover.
'The suddenness of the 2008 trade drop holds out the hope of an equally sudden recover. If the fear-factor-demand-drop was the driver of the great trade collapse, a confidence-factor-demand-revival could equally drive a rapid restoration of trade to robust growth...
There are clear signs that trade is recovering, and it is absolutely clear that the drop has halted. Will the trade revival continue?...
It is useful nonetheless to think of the global economic crisis as consisting of two very different crises: a banking-and-balance-sheet crisis in the over-indebted advanced nations (especially the US and UK)...
and an expectations-crisis in most of the rest of the world on the other hand.'