World trade is rebounding and emerging markets are the beneficiary, Goldman Sachs economists wrote in a May 12 report.

“Recent data have challenged the popular view of the ‘end of globalization’. Over the past year, there are signs that global trade growth has recovered from its post-crisis stagnation, and trade-sensitive assets – including those in EM – have benefited. We take a deep dive into the global trade recovery, in order to understand its drivers, and how it will affect asset markets going forward.

“Our analysis yields three takeaways: A broad-based trade recovery. Strong headline trade data are not convincingly explained by idiosyncratic, one-off stories. The broad-based recovery isn’t ‘just the dollar, ‘just values (but not volumes)’, ‘just Trump’, ‘just commodities’, or ‘just China’, although some of these have played a meaningful role.

“Investment and industrial demand are proximate drivers. An increase in the demand for tradeables has come alongside the ongoing recovery in global investment and industrial activity. Just as slowing demand was, in our view, the key driver of the global trade slowdown five years ago, surging demand now appears to have fuelled its recovery.

“A key theme for FX in open economies. If the recovery in global investment, industrial demand and trade continues (or stumbles), trade-linked assets – including the currencies of open economies – are likely to follow.”