Trade grows faster than the sum of its parts
Following the successful launch of the new Capital Economics report on Jersey's value to Britain, I plan to schedule a few posts on interesting but less obvious aspects of the report, and I begin today with some surprising and quite encouraging news for Jersey on world trade.4 July 2013
The slowdown in the global economy, with many developed countries struggling to deliver growth due to fiscal deficits and austerity programmes, has dominated the economic news agenda now for several years.
A truly remarkable fact is that whilst global GDP has been subdued world trade has been growing at a robust rate as evidenced by the Capital Economics chart reproduced below:-
The transference of economic power from West to East and the emergence of the powerful South – South trading corridor has meant that trade has grown at around 7.5% compound. Trade now accounts for 32% of global GDP, compared to 20%, thirty years earlier. With trade growth comes labour, enterprise and capital mobility, with an estimated 12% of OECD countries populations now comprising immigrants.
This acceleration in cross border business plays very powerfully to Jersey's strengths. As companies and individuals trade and invest overseas outside of their home markets they look for trusted expert structuring centres with good political, fiscal, legal and regulatory frameworks, and clearly Jersey is a world leader on these criteria.
Testament to this fact is that Jersey now accounts for £500bn of foreign investment into the UK (5% of the total) with capital originating mostly from outside the European Union. In my next post I will look at trade closer to home and the balance of trade between Jersey and the UK.