BONN: June 27, 2019. As the G20 leaders meet in Osaka this week, DHL’s latest Global Trade Barometer (GTB) is indicating “a slight contraction” of worldwide trade in the next three months for the first time since its launch in 2018.
The overall decline in the Index to 48 was driven by significant losses for both air and containerized ocean trade, which are the GTB’s two fundamental constituents. Airtrade fell by -6 to 49 points, and containerized ocean trade by -8 points to 48.
The latest developments continue a downward trend the GTB has recorded for several quarters since mid-2018. The current contraction is also the first one since 2015 when the GTB – which takes into account historical data from 2013 onwards – measured more than a month-long decline of global trade volumes in the middle of the year.
“Amidst rising US-Chinese tensions, the slightly negative outlook for global trade for the third quarter of 2019 does not come as a complete surprise,” commented Tim Scharwath, CEO of DHL Global Forwarding, Freight. “The latest GTB clearly illustrates why trade disputes create no winners. Nevertheless, some major economies such as Germany continue to record positive trade growth. And from a year-to-date perspective, world trade growth has still been positive.
“Hence, we remain confident in our initial prognosis that 2019 will be a year with overall positive, but slower trade growth,” he added.
Following Trump’s continuing trade threats with China, the US saw by far the heaviest losses amongst all GTB index countries, with its outlook declining by -11 points to 44 following a negative outlook for major export categories. China scored second in terms of losses, with a decline of -7 points to 49 – an index value one point below stagnation - primarily driven by declining imports in several categories and just minor overall export growth.
Eswar S. Prasad, Professor of Trade Policy and Economics at Cornell University in Ithaca, NY observed: “Growth is weakening in the key drivers of the world economy. Most macroeconomic and labor market indicators point to a cooling of US growth and financial market sentiment has been hurt by trade tensions.”
Prasad said despite Chinese government stimulus, persistent trade tensions are acting as a drag on growth as the “German growth revival looks fragile while India’s growth has hit the skids, with rising doubts about the prospects of major economic reforms”.
DHL said the “still mild” global trade contraction can be explained by the fact that during trade conflicts, trade routes and supply chains shift into other countries to offset the negative effects of trade tensions.
