ICAEW chart of the week – A trade war looms?

Ross Campbell, Director for Public Sector at ICAEW writes:

“With international relations a little fractious currently and talk of a trade war in the press, this week’s chart look at what is at stake in terms of the scale of global trade.

Exports are certainly important to the major trading countries, including the US, the EU, China and Japan, which together make up just over 70% of the global economy. As a proportion of the economic activity (compared to projected 2018 GDP) exports range from 14% for the USA to 20% for China. 

The three largest economies each export in excess of £2tn of goods and services a year. While as a percentage of economic activity this may not seem that much,   it is important to realise that the public sector makes up from 40% to 50% of the economic activity of developed economies, so exports represent a much larger share of private sector activity.  

Furthermore, disruption to the complex supply chains that are so important to global trade could have a multiplier effect on economic activity, and not in a good way.

Of course, not all of the noise made by politicians turns into anything real. Let’s hope the war of words between the US and China doesn’t become an actual trade war, as a world of strong economies needs more, not less, international trade to thrive.”

To comment on the ICAEW chart of the week, visit the ICAEW Talk Accountancy blog by clicking here.

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