World trade: Trade war is starting to kick in - ING

Raoul Leering, head of international trade analysis at ING, suggests that the world trade is feeling the pressure of global trade war as in November 2018, 1.6% fewer goods crossed borders than in the previous month when the volume of world trade still grew 1.2% on a month-on-month basis.

Key Quotes

“The less volatile three-month average growth figure took a nosedive as well with a decrease from 1.1% in October last year to 0.0% in November.”

“Both advanced economies and emerging markets show a decline as of import demand, today’s data release from the Netherlands Bureau of Economic Policy Analysis (CPB) shows. Emerging markets are leading the pack with a significant decline of 3.1%. Among the advanced economies, the US is no longer the locomotive for trade that it was in 3Q of last year.”

“We expect the damage of the trade war to increase over the next twelve months. By far the largest part of tariff elevations by the US and the subsequent retaliation by the US’ trade partners, has only been implemented in the second half of 2018. This means that its detrimental effect on trade growth will continue well into 2019.”

“All together this will lift the share of world trade affected by the trade war from 6% last year to 13% at the end of this year. This will take of 1.1%-points of trade growth for this year and make 2019 a candidate to beat the 1.4% growth figure of 2016 as the weakest year for global trade growth since the trade collapse in 2009.”