The big trade switch is on as emerging markets export less

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This chart shows a trend that has economists worried about the pace of economic recovery: the slowing growth of overall worldwide trade, and the drop in exports from emerging markets even as the advanced economies sell more goods abroad.

The OECD released an interim forecast of global growth today, showing a continued slow recovery in the US, Japan and Germany that is being undermined by slowing growth in emerging markets, including China, Brazil and India. This is a reversal from recent years, when emerging markets drove global growth as Europe stumbled through a double-dip recession and the US slowly emerged from the wreckage of its housing bubble.

But in 2013, industrial production has slowed in emerging economies even as manufacturing grows in wealthier Western nations. Another data point out today that reflects this trend: US factories reported the largest increase in orders in the last two years.

This is all part of the great rebalancing, as wealthier citizens in emerging markets seek access to more imported Western goods, while Western economies re-tool to compete with cheaper workforces abroad. That’s all well and good, but because emerging markets make up such a huge share of worldwide economic activity, global expansion will slow until these countries develop stable sources of internal demand to replace their sales abroad.