Trade between nations is the lifeblood of the global economy.
In a recent note sent to clients about the rise of protectionism in global trade, HSBC’s Douglas Lippoldt and Fredrik Nerbrand included a helpful chart showing where 20 of the world’s largest economies export most goods. Unsurprisingly, countries close to one another tend to be big trade partners, with the largest proportion of exports from both Mexico and Canada sent to the USA.
As HSBC notes: “As can be seen in Chart 17, members of the European Union and NAFTA have significant shares of GDP associated with trade with other members of their respective trade blocks.”
HSBC also highlights how much more reliant on foreign trade some economies in the G20 are than others. Topping the chart is Germany, where exports make up almost 50% of GDP. At the other end of the spectrum is the USA, where less than 10% of GDP comes from exports to other big economies.
Check out the chart below:
The chart also sheds light on just how reliant the UK is on the EU for trade, with exports to the continent making up roughly 15% of GDP.
Britain’s trade relationship with the EU and the rest of the world is a major bone of contention in the debate surrounding the upcoming Brexit referendum.
Remain campaigners argue that Brexit would provide a huge drag on trade and that Britain would be forced to renegotiate all its trade deals with other nations. In April, US president Barack Obama said that the UK would be at the “back of the queue” when it comes to trade post-Brexit.
“And the UK is going to be in the back of the queue — not because we don’t have a special relationship but because given the heavy lift on any trade agreement, us having access to a big market with a lot of countries rather than trying to do piecemeal trade agreements is hugely efficient,” Obama said.
On Thursday, the Bank of England also warned on the trade impacts of Brexit.
On the other hand, those backing the leave campaign argue that Britain will be able to sustain trade outside the EU without doing deals with other countries.
Economists for Brexit, a group providing economic analysis of a post-Brexit world says in its analysis: ” The UK does not need to do a trade deal to trade. It already trades extensively with many countries across the globe under the rules of the WTO and can continue to do so with EU countries in the future (in the same way that the US, Japan and China does). Leaving the EU will decrease prices and boost GDP.”