The pace of expansion of global supply chains, which strongly supported trade growth prerecession, has slowed. In particular, Chinese imports of parts and components have declined from their peak of 60 percent of merchandise exports in the mid-1990s to 35 percent of merchandise exports in 2012, reflecting the progressive substitution of domestic inputs for foreign ones (Constantinescu, Mattoo, and Ruta 2016; Kee and Tang 2016).

Fourth, the pace of easing impediments to trade has slowed since the global recession. Nontariff barriers have increased, and several countries have put trade restrictions in place (UNCTAD 2010; WTO 2018). Since 2017, increased trade tensions between the United States and several other countries, particularly China, have also weighed on global trade growth (World Bank 2019).

After the 2009 global recession, commodity price slide steeply. The 2002-07 global expansion had been accompanied by surging demand for primary commodities, particularly metals, in part because of rapid demand growth in China (World Bank 2015b; Baffes et al. 2018). Between 2000 and 2010, China accounted for 89 percent of the increase in global demand for industrial metals, 54 percent of the increase in global energy demand, and 17 percent of the increase in global demand for food. The resulting pre-recession surge in commodity prices encouraged commodity exploration and discovery, leading to rapid expansion in mining capacity and unconventional energy extraction, especially for shale and offshore oil and gas (World Bank 2015b, 2015c; Khan et al. 2016).

Metal prices reached a peak in early 2011 and then began to decline sharply, reaching a trough in early 2016. A moderate recovery followed. The decline reflected both slowing demand growth, including in China, and increased supply after a period of rapid global resource investment. While OPEC policy initially supported stable oil prices despite surging U.S. oil production, a shift in OPEC policy in mid-2014 triggered an oil price plunge during 2014-16 that caused widespread disruption to oil-exporting countries.<sup>16</sup> At end-2018, energy prices were 32 percent below their 2001Q1 levels, industrial metals prices 37 percent below, and agricultural commodity prices 35 percent below. The broad-based decline in commodity prices weighed heavily on growth in the almost two- thirds of EMDEs that are commodity exporters.<sup>17</sup> The post-recession period was marked by considerable volatility in capital flows to EMDEs and, from mid-2013, occasional spikes in borrowing costs. Following the rebound, global capital flows declined, with sharp outflows in 2013Q3, 2015Q3, and 2018Q2 related to episodes of heightened financial markets uncertainty.18 During these episodes, on average,

> 16 The oil price plunge had both supply- and demand-related origins: increased efficiency in U.S. shale oil production, weak global demand, U.S. dollar appreciation, less-than-expected supply disruptions from geopolitical uncertainty, and OPEC’s policy change to target market share instead of oil prices (Baffes et al. 2015). A detailed analysis of sources and implications of the oil price collapse is available in Baffes et al. (2015) and World Bank (2015a, 2018a, 2018b). 17 In particular, Brazil (iron ore, soybeans), Chile (copper ore, refined copper), Guinea (aluminum ore), the Philippines (nickel ore), Qatar (liquefied natural gas), Saudi Arabia (crude oil), and Thailand (rice) account for more than one-fifth of global exports of these commodities.

> 18 In May 2013, the Chairman of the U.S. Federal Reserve Board, in testimony to U.S. Congress, noted that a robust U.S. economy might warrant a tapering of asset purchases; this led to the “taper tantrum” (Arteta et al. 2015). In June 2015, a period of turbulence began in the Chinese stock market: by mid-July the Shanghai Stock Exchange had lost one-third of its

12