years ”. another example is housing, where prices are unlikely to return soon to the pre - crisis levels, especially in some countries. also in this sector profit margins are likely to be lower and so will investments and employment. excess supply and debt might require years before being absorbed again, as shown in the early 2000s after the burst of the high - tech bubble. other sectors which could be downsized in a permanent way are those in which technology turned out to be out of pace with medium term trends in energy prices. another grave side of the current crisis – which was also largely unpredicted – is the collapse of international trade, which has brought the process of economic integration backwards, some sort of de - globalization. this has hit exports and imports of all countries, in a rather brutal way, with multiplier effects on investment, consumption and employment. the sectors which have been more seriously hit are those that were more exposed to international competition, which had grown strongly over the recent years thanks to the global integration of production processes. those countries which relied most on exports and manufacturing production have been hit hardly by a crisis which had originated in the financial sector. according to some estimates, around 90 % of world trade was partially or totally supported by financial instruments, which in the past years had also experienced a rapid process of innovation. the crisis of confidence which burst after the failure of lehman brothers, stopped financial flows, especially those between agents located in different countries which are less acquainted with each other and base their transactions on market - based liquid and sophisticated credit instruments, which are however also riskier. the reflow of capital towards the major financial centres and the de - leveraging process, which started in the second half of september 2008, has induced banks to reduce their non - core activities. export credit, which consists in financing not only the export company but also the foreign importer which buys from the exporter, entails higher risks than domestic activities. credit lines with foreign counterparties, which require a greater use of capital, tend to be reduced, especially for small and medium size enterprises and towards emerging markets. we are observing recently that trade finance is going back to simpler instruments, such as documentary credit and confirmed letters of credit, which substantially reduce risk. the link between financial integration and trade integration has been the transmission mechanism through which the loss of confidence in the financial system has spread to the real economy, and from the country where the crisis started to the rest of the world. this implies

. on the one side, the us ran continuous deficits since the 1980s, with the exception of a couple of years, and growing over time, reaching 6 % of gdp in 2006. on the other hand several asian countries, notably china, recorded growing current account surpluses ( which in the case of china reached over 10 % of gdp in 2007 ). the financing of the us deficit took place largely through the purchase of dollar denominated government bonds by the rest of the world, resulting in the accumulation of huge liquid reserves, in particular in china, japan and oil exporting countries. another international imbalance derived from the growing pressure that world demand exercised on the scarce resources of the planet, in particular primary commodities, such as oil, generating a sharp price rise until mid 2008. primary commodity price developments have put into question the convenience of several durable products with high energy intensity, thus reducing their demand. imbalances have emerged also within countries, generating excessive growth in some sectors, such as finance and housing, and large financial flows, especially household debt. in the us all these imbalances have developed at the same time. just to give an example, in the five years before the crisis the share of profits made in the financial sector profits rose to 40 % of overall corporate profits, the double with respect to the average of the previous thirty years. from 2002 to 2007 the world economy grew at a yearly average of 4. 3 %, pulled by international trade growing by 7. 3 % per year. this has been the most intense period of postwar growth. it has also been the most fragile, as a result of domestic and global imbalances. this suggests that won ’ t be possible to exit from this crisis and return on a sustainable growth unless the imbalances which have accumulated until a couple of years ago are reabsorbed. it implies in particular that some sectors of economic activity which grew in an unbalanced way in the past might be substantially downsized, not only in the short term but also over the medium term, when the world economy will start growing again. one of the sectors that is likely to be downsized, at least for some time, is finance, given that risk aversion is likely to remain elevated for some years, reducing the scope for innovation. financial regulation will tend to reduce the scope for non regulated sectors. the whole financial system will have less leverage, lower margins and thus less employment than in the so - called “ golden