Export-led recoveries for emerging and ailing markets may be thwarted by falling demand for imports in major economies.
Standard Life Investments’ Macro Digest report flags the impossibility for all countries to increase their trade surpluses, with some nations needing to carry the can of higher imports.
However, it highlights Japan’s recent shift from net exporter to importer in recent years as a potential outlet for exporting nations.
“For some time now, we have seen growth cheerleaders flagging an export-led recovery as a key reason why countries as diverse as Greece and Mongolia might be about to see an upturn in their economic fortunes,” SLI analysts say.
“Of course, a simultaneous and universal improvement in external balances across the world is not possible as some nations would have to see a noticeable run-up in imports to offset the net export revival elsewhere.”
China’s internal trade figure for 2013 was $4.16trn (£2.53trn), making it the globe’s largest trading partner.
“Setting aside the suspect nature of the Chinese trade statistics, which have borne only passing resemblance to comparable trading partner data, recent trends suggest that domestic demand in China has been improving,” the report says.
China’s imports grew more than expected at 8.3 per cent on the previous year, but commodities, rather than durable goods and machinery, continue to make up the mainstay of inflows.
The US’ trade deficit continues to fall, hitting its lowest level in four years in November.
“While this is only partly explained by slower non-petroleum goods and services import growth – changes in the petroleum trade balance have also had an important impact – it does make the search for other sources of demand for imported goods more pressing,” SLI says.
Over the past year Japan’s import demand has jumped significantly, mostly due to the closure of its nuclear reactors causing it to buy energy resources.
That compounds a falling trade surplus, which has been amplified by the devalued yen that has shed more than a quarter of its value in 15 months, Standard Life says.
“Since the global financial crisis, Japan has frittered away its previously bullet-proof trade surplus, with the November trade deficit coming in at ¥1.25trn (£72.9bn), compared to a ¥1.09trn deficit in October,” it says.
“That is not to say that Japan’s transformation into a trade deficit nation has not provided non-resource exporters with any new source of demand.
“Clearly, Abe’s policies have stoked the domestic economy, with activity likely to remain robust ahead of the consumption tax hike in April.”