Global trade winds are subsiding

For most of the post-war period, the global economy has been propelled by a healthy expansion in global trade. Between 1950 and 2010, for instance, the sum of world exports and imports jumped from 20% to 60% of global GDP. From the mid-1980s to the mid-2000s, annual merchandise trade growth rose by 7% a year by value (measured in dollars). By volume, the long-term average is around 5%.

But since the global financial crisis, trade has slowed sharply. In value terms, it has flatlined or declined since 2011, while measured by volumes it has hovered between zero and the low single-digits for the past five years. Some of this is due to cyclical factors, including the fall in commodity prices, which reduces the value of many of the goods shipped round the world. Europe, the source of a third of world trade, has been in crisis. But a revival in protectionism is also playing a part, and is becoming an increasingly important part of the investment landscape.

World Trade Organisation figures suggest that the pace of liberalisation has slowed, with 109 trade deals coming into force in 2010-2014, compared with 128 in the previous five years, says The Economist. Meanwhile, the Doha round of trade talks was officially abandoned earlier this year. That marked the first failure of a multilateral trade negotiation since the 1930s, says Liam Halligan in The Sunday Telegraph. And "the unfortunate reality is that protectionist pressures are unlikely to abate".

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One problem is that emerging markets think the West's relative power has declined. They may therefore push harder to end what they see is their continuing marginalisation in the global economic system. An ongoing dispute is the spat over voting rights in the International Monetary Fund, which encouraged China to establish the Asian Infrastructure Investment Bank as a rival to the Bretton Woods institutions.

On top of all this there is the failure of the Transatlantic Trade and Investment Partnership (TTIP) deal between the US and Europe to consider. Neither Trump nor Clinton is in favour, and European governments are less and less keen following a public backlash. The deal isn't just about free trade, says Wolfgang Munchau in the FT. It's "an intrusion into national sovereignty over economic policy". This facet of the European single market is also the reason UK voters plumped for Brexit.

Given the ugly mood, governments who attempt to "double down on policies to liberalise global trade and finance even further risk a wider insurrection against the global liberal economic order".