International trade has reached all-time highs in 2018, as shown in the chart below, which was constructed using data from the Kuehne + Nagel World Trade Indicator (WTI). The data points show the highest point the WTI reached during each year from 2008 to 2018. Seasonally adjusted and measured in nominal U.S. dollars, the WTI is based on import and export projections for the world’s largest economies. It encompasses over 60 percent of international trade and more than 75 percent of the world’s gross domestic product (GDP).
Of the countries measured in the WTI, the U.S. was the strongest performer in 2018. When measuring by GDP, the U.S. retained the position as the largest economy in the world. According to the World Bank, U.S. GDP totaled $19.391 trillion in 2017. In 2018, the U.S. GDP grew at rates of 2.2 percent in Q1, 4.2 percent in Q2 and 3.5 percent in Q3 and is projected to grow at a rate of 2.9 percent in Q4.
It is important to highlight that quarterly GDP data for the United States is revised three separate times before the number is official; thus, the final calculation will have a minor margin of error. This specific data for the U.S. reflects real GDP seasonally adjusted at annual rates. With these disclaimers in mind, annual GDP data for 2018 will be around $20.003 trillion.
The graph below shows U.S. GDP data from 2008 to 2018. The data was pulled from the U.S. Bureau of Economic Analysis and shows strong growth over the past decade. Of the years measured, 2018 is projected to experience the strongest growth rate.
The European Union had the second-best performance in the past year. According to the World Bank, the EU’s GDP totaled $17.278 trillion in 2017. In 2018, the EU’s GDP grew at rates of 0.4 percent in Q1, 0.4 percent in Q2 and 0.2 percent in Q3 and is projected to grow at a rate of 2 percent in Q4.
The data pulled for quarterly GDP in the EU comprised the EU-19, which are the 19 countries that use the euro as currency. More countries comprise the entire EU, but that data was not as readily available. Although there are discrepancies in the data, GDP growth in the EU-19 and EU-28 follow a similar trajectory.
The data used for quarterly GDP growth will be revised several times before a final number is agreed upon by the EU. Due to these potential revisions, the final calculation will have a minor margin of error. This data reflects real GDP seasonally adjusted at annual rates. With these disclaimers in mind, annual GDP for 2018 in the EU will total around $17.4 trillion.
The graph below shows EU GDP data from 2008 to 2018. The data was pulled from EuroStat and shows a decline in growth over the past decade.
The People’s Republic of China had the third-best performance of the past year. According to the World Bank, China’s GDP totaled $12.238 trillion in 2017. In 2018, China’s GDP grew at rates of 6.8 percent in Q1, 6.7 percent in Q2 and 6.5 percent in Q3 and is projected to grow at a rate of 6.5 percent in Q4.
The data used for quarterly GDP growth in China reflects year-over-year performance and is calculated differently from the EU and U.S. This is one of the reasons China’s GDP appears to be much less volatile than the EU and U.S. Also, it is important to remember that China is more of a quasi-command economy than the EU or U.S., allowing the Chinese government to allocate resources during times of need, like the Great Recession.
China’s quarterly GDP statistics are usually much less revised than EU or U.S. data. In theory, this allows for the final annual GDP calculation to be more accurate than the EU or U.S. data. With these disclaimers in mind, China’s annual real GDP for 2018 will total around $13.046 trillion.
The graph below shows China’s GDP data from 2008 to 2018. The data was pulled from the World Bank and shows steady GDP growth over the past decade.
The GDP of the U.S., EU and China shows strong positive correlation with the WTI. When these economies contract, the WTI declines. Inversely, when growth is experienced, the WTI expands.
In the future, as China transitions into a consumer-based economy, the WTI will become closely correlated to the Chinese economy. If EU growth continues to stall in the future, it will become less relevant to world trade. The U.S. will likely maintain its moderate growth going forward and along with China, will drive world trade.