2008 Financial Crisis--- Impact on Imports and Exports

UK’s export and import increased almost ten years, however this situation totally changed after 2008 financial crisis. Recession led many developed countries face a serious financial problem. Financial crisis also cause world industry index glide. Many countries imports from UK might not absorb as before, therefore UK’s world export of goods and services decreased by 22.1% in USD. Financial crisis has hit hard trade in UK, therefore UK’s government able to protect local industries which issue protection policies to reduce imports, and this could reduce competition for local business, since then UK’s imports decreased by 22.5% in USD.
                        Figure 2: total UK Exports, Imports and GDP, 1980-2009, Million USD

               Source: IMF and WTO GDP figures shown on right-hand axis, all in current prices.

The graph shows that UK’s exports, imports and GDP all increased from 1980 to 2008, and decreased dramatically in the July of 2008, the reason why the whole figures not decreased right way since financial crisis happened, because companies received orders may earlier than the crisis, so after factories finished their orders, UK’s exports and imports both decreased immediately. As mentioned in first blog (2008 Financial Crisis---Impact on UK Exchange Rate), sterling decreased more than 7700 points, and this is one of the main reasons why UK’s imports dropped almost one fifth of the total amount in a short time. In general, when sterling worthless, UK’ exports should be increase, however exports declined 22.1% which only 0.4% lower than the imports. I do believe that EU countries and the USA both tried to reduce imports to keep their local business maintain a momentum of healthy development and these structural led UK’s exports dropped, the reason is more than 60% UK’s exports transactions to the USA and EU countries.

In a short, the UK’s premier Cameron promised too much when he suggested that a stimulus package would keep the economy ‘health’. However, the speed of recovery is still slow than his promise, the repid deterioration of the situation is not a good information for people revise UK's emergency economic outlook.