Higher domestic investment would therefore be a constructive way to address large current account surpluses and, at the same time, to prepare for future challenges. Now, does the current trade recovery bode well for the future? What are the prospects for global and euro area trade? Will we return to an environment where trade growth persistently outpaces GDP growth?
In answering these questions, I will distinguish between cyclical and structural factors. Cyclical factors affecting trade growth As for the cyclical factors, empirical evidence suggests that economic growth alone is often not a sufficient condition for strong trade growth. Indeed, trade did not start to lift off before we saw a nascent recovery in global investment, which had weakened significantly after the Great Recession.