The DHL World Trade Barometer reflects the deterioration of global trade, due to negative sentiment in the private sector

US and China reveal much lower trade volumes

The United Kingdom shows an improved outlook, despite an unresolved Brexit.

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For the first time since its launch in January 2018, the DHL World Trade Barometer (GTB), indicates a slight contraction of the world trade for the next three months. These losses have led to a general decline in the outlook for the world trade at -8 points, with a new index value of 48. In other words, the world trade, predicted by the trade flows in intermediaries and early cycle commodities, will decrease in the next three months, although slightly. The overall decrease has been caused by significant losses for both air and sea trade, which are the two fundamental components of the GTB. He air trade decreased by -6 to 49 points, and the maritime by -8 points to 48 points.

 

 

Slow trade momentum for several consecutive quarters

 

The latest developments continue a downward trend that the GTB has been recording for several quarters, since mid-2018. The current recession is also the first since 2015, when the GTB, which takes into account historical data from 2013, measured more than a month of declining trade volumes world in the middle of the year.

 

Regarding the most recent forecast, Tim Scharwath, CEO of DHL Global Forwarding, Freight, commented: “In the midst of increasing tensions between United States and China, the slightly negative outlook for global trade for the third quarter of 2019 is not a total surprise. The latter GTB clearly illustrates why trade disputes have no winners. However, some major economies, such as Germany, continue to record positive trade growth. And from a year-to-date perspective, global trade growth has still been positive. “We are therefore confident in our initial forecast that 2019 will be a year of overall positive but slower business growth.” Regarding the implications for Deutsche Post DHL Group, Tim Scharwathha explained:»The GTB It is a useful tool for us to anticipate economic developments at an early stage. We are well prepared to deal with the anticipated developments. Our divisional structure and portfolio, as well as our international activities, allow us to balance the economic effects within the company and remain resilient to changes in global trade dynamics.

 

The latest GTB results show the negative effects of trade wars

 

Eswar S. Prasad, professor of trade policy and economics at the Cornell University in Ithaca, New York, USA., commented: “Growth is weakening in the key drivers of the global economy. Most macroeconomic and labor market indicators point to a cooling in job growth. U.S. And financial market sentiment has been affected by trade tensions. Stimulus measures by the Chinese government appeared to be stabilizing growth, but persistent trade tensions are once again dampening growth momentum in China. The German growth recovery looks fragile, while India's growth has been hampered, with growing doubts about the prospects for major economic reforms. "A synchronized slowdown in the world's major economies could affect trade volumes if uncertainty continues to dampen consumer demand and business investment."

 

The trade conflict between the United States and China drags down the momentum of world trade

 

As one of the parties involved in the current trade disputes, USA. saw by far the largest losses among all GTB index countries, with the outlook declining by -11 points to 44. Those losses were mainly due to a negative outlook for major export categories. China takes second place in terms of losses, with a decrease of -7 points to 49, an index value one point below stagnation. China's negative outlook was mainly due to declining imports in several categories, combined with smaller overall export growth. While the trade dispute between the two countries has been an imminent threat to growth, since the launch of the GTB in January 2018, it has never manifested itself more than now in actual trade forecasts. Given the great contribution of United States and China to the global index, their declining trade growth rates are a major contributor to the projected global decline. What is still a rather slight contraction in world trade can be explained by the fact that during trade conflicts, trade flows barely reduce. Instead, trade routes and supply chains shift to other countries. On a global scale, this partially offsets the negative effects of trade tensions between countries.

 

UK trade unaffected by Brexit threat, Germany and India maintain moderate growth rates

 

In the wake of the weakened global trade climate, three member countries of the GTB record slower trade growth forecasts and manage to stay above the stagnation level: Germany, has recorded a mere -1 point decrease compared to the previous quarter and now has a score of 52, while the India loses -6 points, resulting in an outlook of 53 points. He United Kingdom actually gains +2 points, scoring an index value of 52. Given the still unresolved uncertainties of the Brexit, this result seems somewhat contradictory. It could be an indication that companies are increasingly stockpiling inventories amid the risk of a difficult Brexit at the end of October.

 

East Asian economies with greater trade momentum

 

In addition to China, the economies of East Asia of Japan and South Korea register slow commercial momentum. The index for Japan has fallen by -7 points and now stands exactly at 50, indicating stagnant trade dynamics. South Korea is the third GTB country with a forecast decline in trade growth for the next three months: due to a slight decline with 49 points in March 2019, the outlook was further reduced by -3 to 46 points.

 

The next GTB update will be released at the end of September.