Don’t look now, but global trade is accelerating.
In the first quarter, the volume of goods imported and exported surpassed the high previously recorded in early 2008. Trading volume continues to increase, especially exports from emerging Asia to the rest of the world. Japanese trade fell, even before the earthquake-tsunami-nuclear disasters. In the US, imports rose and exports fell, which will drag on first quarter GDP. Nevertheless, economic activity is strengthening around the world, and what goes around comes around.
Industrial production seems to be picking up as well, expanding everywhere. Again, emerging Asia leads the pack, with production up 5.5% quarter-over-quarter. China and India continue to expand their production base in order to meet the rest of the world’s demand. Global industrial production continues to hit new highs. The biggest problem that manufactured exports create is too many dollars for investment. We all should have such problems!
The gloom crew is missing this. Without any fanfare China Mobil, Mittal Steel, Tata Motors, and Taiwan Semiconductor are capitalizing on the global recovery. Their plants are efficient, their trading partners well-capitalized, and their markets are growing. As long as trade and profits continue to grow, the world’s economy will continue to recover.
Douglas R. Tengdin, CFA
Chief Investment Officer
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