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Post-Crisis Growth and Integration in Europe

Post-Crisis Growth and Integration in Europe

Catching-up Strategies in CESEE Economies

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

Against the backdrop of the financial crisis that unfolded in 2008, this book deals with policy challenges going forward, focusing in particular on the ongoing catching-up process in Central, Eastern and South-Eastern European countries.

Chapter 23: The Great Trade Collapse and its Impact on Firms in Europe

Laszlo Halpern

Subjects: economics and finance, financial economics and regulation


1 László Halpern This chapter discusses recent trade developments from different perspectives: presenting, first, regional trade tendencies over time; second, national tendencies in seven particular EU countries; and third, firm-level results for this sample based on recent survey data. The recent export collapse was larger than any other since the 1960s (see Figure 23.1). Caused by the great recession, this export contraction was sudden, severe and synchronized worldwide. This great trade collapse was mostly due to a demand shock. Commodity prices which plunged when the price bubble burst in 2008 continued to mirror the decline in world demand. The price movements and diminished demand depressed the value and volume of commodities trade. Evidence shows that the trade collapse in 2008–09 was significantly larger than the GDP contraction in OECD countries (see Figure 23.2). 15 10 5 0 19 19 19 19 19 19 19 19 19 20 20 –10 –15 Source: OECD ‘Quarterly National Accounts’. Figure 23.1 Volume of world merchandise exports, 1965–2009 (annual percentage change) 268 M2733 - NOWOTNY TEXT.indd 268 20 –5 65 69 73 77 81 85 89 93 97 01 05 09 19/09/2011 16:34 The great trade collapse and its impact on firms in Europe 10 5 0 –5 –10 –15 –20 GDP Exports Imports 269 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Q2-2009 Q3-2009 Q4-2009 Source: OECD ‘Quarterly National Accounts’. Figure 23.2 Real GDP and trade growth of OECD countries, 2008–09 (year-to-year percentage change) Trade fell by more than 15 per cent,...

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