Global trade continues to lose momentum

DHL’s latest Global Trade Barometer falls by a further two points to a new index value of 45, indicating a further trade contraction for the next three months for most major economies — with the exception of India, where ocean freight volumes remain buoyant.

News ID: 80456

Date: 30 November 2019 - 08:32

WORLD trade is forecast to see a further contraction in the short term, with most major economies expected to undergo a shrink in activity, with the exception of India.

The overall trade outlook is reduced by 2 points, to a new index value of 45, meaning that “global trade continues to lose momentum, albeit mildly”, according to DHL’s latest Global Trade Barometer.

“Against the previous updates, the downward tendency is largely moderate and steady, neither indicating an acceleration of the decline nor a bottoming out,” it said.

The level of the quarterly index has fallen steadily since its score of 60 last December, dropping to 56 points in March, still signalling slight growth, before dropping below the threshold of 50 points, which marks the line between positive and negative growth in the GTB methodology.

It fell to 48 in June and 47 in September, before slipping further to its current level of 45 this month.

“Except India, all surveyed countries are affected by the deceleration and record indexes below the 50-points-threshold of no growth,” DHL said.

It said the overall decline was driven by minor decreases in both, air and containerised ocean trade. Air trade declined by 3 points to 42 points, and containerised ocean trade by 2 points to 46 index points.

“The year will probably end with moderate world trade,” said Tim Scharwath, chief executive of DHL Global Forwarding, Freight. “However, we have to bear in mind where we come from: the rapid growth world trade has undergone in recent years was like climbing Mount Everest. Now, we are on the descent, but we are still breathing altitude air.”

Out of seven key surveyed countries, six record mildly negative trade outlooks: Germany and China both fall by 3 points on the scale to an index of 45 and 42, respectively. For Germany, this development is mainly triggered by a weakening air trade outlook, which significantly drops by 7 points to 45, said DHL.

“The slowdown in Chinese trade is caused by sluggish air and ocean trade, leaving China with the weakest growth outlook of all surveyed countries,” the report noted. “Needless to say, this downturn can be attributed to the ongoing trade war between China and the US.”

US trade is also expected to contract further, albeit an almost unchanged overall trade outlook of 44 index points (-1 points compared with the previous update).

The overall outlook for South Korea decreases by 2 points to a new index value of 43.

India is the only country that manages to return to a moderate growth outlook, picking up +5 points to 54 “on the back of a very robust ocean trade”, the barometer noted. “In contrast to continuously weak air trade (-4 points to 44), Indian ocean trade significantly increases by +10 to an index of 60.”

Apart from India, two country developments stand out in particular: Japan and the UK.

While Japan and the UK had been the only countries with positive trade outlooks in the previous update in September, the two countries record the highest losses in this period, with both, Japan and the UK falling below the 50-point threshold.

UK trade had already recorded a downward tendency in the previous update. For the next three months, the forecast for the UK falls below the point of no change for the first time: dropping 4 points to a new index value of 49, the GTB indicates a mild decrease for UK trade. The decline is caused by a slight decrease in air (-4 to 49) as well as ocean trade (-5 to 48).

“After several quarters of relative resilience, this development obviously reflects the persisting Brexit uncertainty,” the report said.