Golden age of global trade may be about to end

THE world economy is more integrated than ever before. Global trade as a share of GDP (gross domestic product) has hit a record high in real terms. Transactions zip back and forth across international borders at an unprecedented rate. However, global trade is changing and that is not going to be good for some economies.

The global trade in goods has not hit new highs; it has stagnated as a share of global GDP. However, in an increasingly virtual world, we cannot look at trade in goods alone. Ten years ago, buying music meant buying a compact disc - a good, and recorded in the data as such. Nowadays, my nieces think compact discs are shiny beverage coasters. No one under the age of 16 can really comprehend buying music in physical form - music is downloaded (legally or otherwise). Downloading music from a foreign website is trade, but it is not trade in goods. Buying music has shifted from trade in goods to trade in services.

More and more of our global trade is taking place as virtual trade in services - music, films, computer games and even books and magazines are all bought as services. It is trade in goods and services that has hit record highs. This is not necessarily great news for shipping companies or ports that depend on physical trade.