Global trade: Cooling down, but no major setback so far

July 2, 2018

The gKNi World Trade Indicator registered 140.2 points at the end of June, almost unchanged from the previous month. Although still trending 10% higher year-on-year, global growth has lost momentum.

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World Trade Indicator at the end of June 2018, seasonally and working-day adjusted (SA), in USD: 140.2 points, Jan 2010 = 100 points. Export and import data from World Trade Organization (WTO) at the end of April 2018 (NSA), in USD: 145.7 (+17.0% YoY), Jan 2010 = 100 points.

Slightly below record high

The gKNi World Trade Indicator powered by LogIndex — the data company of Kuehne + Nagel Group — stood at 140.2 (10.1% YoY) at the end of June, -0.1% compared to May. The current reading is 0.5% below the record high achieved in February. Annualised growth slowed to 12.6% in June from 13.1% in May (on year-to-date basis).

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Month-over-Month changes of gKNi World Trade Indicator (seasonally and working-day adjusted, SA) past 3 years.

Monitoring quarterly changes, world trade growth came to a standstill in the last three months: the seasonally adjusted gKNi World Trade Indicator rose by 0.2% in the second quarter. However, the benchmark was high - the first quarter saw a surge in global trade by 4.5% (QoQ). Compared to the previous year, the second quarter was up 11.5%. The last three-monthly figures available from the World Trade Organization (WTO) by April registered a year-on-year change of 13.6%. This comparison illustrates the decreasing growth dynamics.

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This chart shows the Month-over-3-Month changes based on the gKNi World Trade Indicator (Moving Average 3-Month).

Rush hours at the ports

Interestingly, container traffic on the oceans accelerated in the second quarter (+1.3% QoQ compared to +0.6% in the first quarter). The main drivers of this development were the ports in the US and China. Some of the largest ports reached new record highs in June. The US ports increased the throughput in the past 3 months by 2.5% compared to 1.7% in 1st quarter, while sea freight in China was up 1.2% vs -0.3% in the 1st quarter.

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Foreign trade by region and sector.

Emerging markets outpace advanced economies

The economies in Asia and North America recorded still a remarkable annual growth rate in June (YoY). This trend is expected to continue in July, according to LogIndex forecasts. The highest year-over-year rates in July is predicted for China, Brazil and India. In general, emerging markets outpace advanced economies, regardless the divergent developments in the financial markets – influenced by the strength of the US dollar.

All told, regardless the recent protectionist measures, there is – so far – no major setback visible in cross-border trade. However, the risks to the forecast lie on the downside.