Forex Flash: Global supply chains transform international commerce – Goldman Sachs

The development of global supply chains has transformed patterns of international trade. This has affected both the Euro area’s trade with the rest of the world (‘extra-area trade’) and trade within the Euro area itself (‘intra-area trade’).

“Reflecting the geographical pattern of global growth, a gap has opened up between robust recovery in the Euro area’s exports to the rest of the world and moribund exports within the Euro area. Peripheral economies are less directly exposed to extra-Euro area trade than Germany. Yet it is a mistake to think that they fail to benefit from demand in growth markets such as China.” writes the Economics Research Team at Goldman Sachs. Spain exports intermediate goods to Germany that are used to produce exports to meet extra-Euro area demand.