Exports are growing, but too slowly to rescue the economy

As Britain’s economy stumbles toward a likely recession, hopes are pinned on exports, particularly to faster-growing parts of the world. Since 2007 the pound has dropped nearly a quarter on a trade-weighted basis. A devaluation in the early 1990s helped Britain export its way out of recession. Can it repeat the trick now?

There are some encouraging signs. Britain’s trade deficit shrank from 4% of GDP in 2007 to around 1% of GDP by early 2011. But the economy might have been expected to do better after such a big depreciation. The obstacles have been many. Falling global demand blunted the impact of a cheap pound in 2008 and 2009. Once global trade recovered, so did Britain’s appetite for imports—despite a rise in relative import prices of roughly 20% since 2007. A decade of strong sterling has chipped away at the capacity of manufacturing industry—and factories cannot be rebuilt quickly. The financial-services industry, which accounted for a third of British exports in 2008, has been slow to recover.

A deeper concern is that Britain has become too dependent on moribund rich-world markets. The share of exports going to Europe has fallen in the past decade, but the continent still accounts for half of British exports. That market is shrinking; the Economist Intelligence Unit forecasts that the euro-zone economy will contract by 1.2% in 2012. America absorbs more British exports than any other single country and its economy still looks relatively robust. British exports to that country fell 4% in the year to September, but showed signs of recovery, along with America’s economy, in October and November.

The emerging economies of Asia and Latin America seem a better long-term bet than Britain’s established markets. But the combined share of British exports going to the three emerging-market giants—China, India and Brazil—is less than 5%.

The Economist January 2012

Translate the text into Russian: № 16 1550 printed characters

China’s stimulus package hits the spot

For global economy, revival in demand is a sign of progress

China’s $585 billion government stimulus program appears to be kicking in, new data suggest, raising the chances that the world’s third-largest economy may be turning a corner.

Chinese demand for raw materials, hard hit in the past months, is showing signs of recovery. Crude-oil imports hit a one-year high in March. Steel mills in March imported record quantities of their key raw material, iron ore, in anticipation of a pickup in demand in coming months.

The signs augur well for the global economy. China has been one of the world’s most voracious consumers of raw materials. While its aggressive spending plan reflects the power of its state-dominated economy, there are signs that its thrifty consumers are starting to spend more.

Car sales hit a monthly record in March, according to figures issued Thursday, marking the third consecutive monthly rise. Housing sales in major cities have also picked up, with lower prices attracting buyers. The optimistic outlook has spread to businesses. The National Bureau of Statistics said last week that the survey of managers’ confidence rose in the first quarter after plunging in the final quarter of 2008.

Overall, it appears that the state’s push has helped keep China from slipping into a downward spiral in which poor economic conditions and declining confidence feed off each other. The size of China’s stimulus, announced in November, gets some credit for that: Along with the U.S. plan, it is one of the largest in the world. But the vestiges of China’s command economy have also proved useful. The government’s ability to direct bank lending and investment spending has meant its stimulus efforts have worked faster than many initially expected.

Beijing’s program still has considerable work to do, with new data also charting continued contraction in the country’s export sector.

The Wall Street Journal April 2009