The relationship between global trade and stock market performance is a recurring theme in IELTS Writing Task 2 questions. Based on analysis of past exam trends from leading IELTS preparation websites, this topic appears approximately once every 4-6 months, particularly in questions about economics, international trade, and financial markets.
Let’s examine a relevant question that has appeared in recent IELTS tests:
Some people believe that increased international trade has a negative impact on domestic stock markets and creates economic instability. To what extent do you agree or disagree with this statement?
Analysis of the Question
This question requires candidates to:
- Take a clear position on whether international trade affects stock markets negatively
- Support arguments with relevant examples and explanations
- Consider both economic stability and market performance
- Provide a well-structured response with clear reasoning
The topic connects closely to impact of international stock market fluctuations and requires understanding of how global markets interact.
Impact of Global Trade on Stock Market Performance Analysis
Sample Essay 1 (Band 8.5)
The assertion that growing international trade negatively impacts domestic stock markets and creates economic instability is a matter of significant debate. While there are some short-term challenges, I strongly disagree with this view as evidence suggests that increased global trade generally strengthens stock markets and promotes economic stability over the long term.
First and foremost, international trade expands market opportunities for domestic companies, which typically translates into higher stock valuations. When firms can access global markets, they often experience increased revenue and profitability, factors that directly influence how stock markets affect economy. For instance, many Asian technology companies have seen their stock prices soar after successfully entering international markets, reflecting improved business performance and investor confidence.
Moreover, international trade fosters economic diversification and resilience. Countries engaged in global trade develop multiple revenue streams and reduce their dependence on any single market or sector. This diversification helps protect against local economic shocks and contributes to more stable stock market performance. The relationship between how interest rates impact stock market trends becomes more manageable when economies are well-integrated globally.
However, critics might point to short-term market volatility caused by international trade disputes or global economic events. While these concerns are valid, they overlook the sophisticated risk management systems and regulatory frameworks that have evolved to handle such challenges. Furthermore, the impact of trade tariffs on stock market performance is often temporary and markets typically recover as adaptations are made.
In conclusion, while international trade may introduce some short-term market fluctuations, its overall impact on domestic stock markets and economic stability is predominantly positive. The key lies in maintaining robust regulatory frameworks and understanding how global markets affect investment strategies.
Global Stock Market Trading Floor with Digital Displays
Sample Essay 2 (Band 6.5)
International trade and its effects on stock markets is an important topic today. I partially agree that it can sometimes cause problems, but I also think it has good points for the economy.
When countries trade more with each other, it can make stock markets go up and down quickly. For example, when there are trade problems between big countries like America and China, many company stocks lose value. This makes people worried about their investments and can cause economic problems.
But international trade also helps companies make more money. When businesses can sell their products in other countries, they often do better and their stock prices go up. This is good for the economy because more people want to invest in these companies.
Another good thing is that international trade helps countries share new ideas and technology. When companies work together across borders, they learn from each other and become stronger. This usually makes their stocks worth more money over time.
Sometimes international trade can cause problems when there are global economic problems. But I think these problems don’t last very long and the benefits are bigger than the problems.
In conclusion, while international trade can sometimes cause short-term problems in stock markets, I believe it is mostly good for the economy and stock markets in the long term.
Key Vocabulary
- Economic volatility (n) /iːkəˈnɒmɪk vɒləˈtɪlɪti/ – Rapid and unpredictable changes in the economy
- Market valuation (n) /ˈmɑːkɪt væljuˈeɪʃən/ – The process of determining the current worth of an asset or company
- Regulatory framework (n) /ˈregjʊlətəri ˈfreɪmwɜːk/ – The system of regulations and guidelines governing financial markets
- Economic diversification (n) /iːkəˈnɒmɪk daɪˌvɜːsɪfɪˈkeɪʃən/ – The process of varying economic activities
- Trade disputes (n) /treɪd dɪˈspjuːts/ – Disagreements between countries over trade-related issues
Conclusion
The topic of global trade’s impact on stock markets remains relevant for IELTS candidates. Practice writing responses to similar questions such as:
- The role of technology in international trade and stock market performance
- The impact of trade agreements on domestic financial markets
- The relationship between currency exchange rates and stock market stability
Feel free to share your practice essays in the comments section for feedback and improvement suggestions.
