Global trade likely to shrink by 0.2% in 2019 – ING


According to ING analysts, global trade will shrink by 0.2% in 2019 and growth will only be 0.9% in 2020.

Key Quotes

“Trade levels dropped more than 3% in the last two months of 2018, making it an uphill battle to get to trade levels well above the average of 2018 – a battle that is about to be lost. On average, the monthly level of goods traded worldwide during the first half of this year has been 0.5% lower than the monthly level for 2018 as a whole. And there are no signs that the second half of 2019 will show a recovery that lifts trade growth anywhere close to the trade growth of 2018, which was 3.2%.”

“Industrial production, a major driver of world trade in goods, has shown very weak growth during the first half of 2019. The average production level per month has been only 0.7% higher than the average of 2018. Some regions and countries, such as the eurozone and Japan, actually experienced declines in industrial production.”

“Given the negative tendency in manufacturing PMIs worldwide, we assume there will be no growth of industrial production for the remainder of this year implying total industrial production growth will only be 0.5% for 2019. For 2020 we expect the industry to recover somewhat, but the outlook remains bleak with a year on year growth rate of just 0.75%.”

“If the trade war develops according to our base case, global goods’ trade will shrink 0.2% this year. Due to a deal between the US and China, which we expect to be closed at the start of 2Q next year, 2020 will be characterised by the reversal of half of the tariffs. This will dominate the negative feeding through of the 2019 tariff hikes into the first quarter of 2020 and the net effect will push up traded growth next year by 0.4%, resulting in a 0.9% growth rate for traded goods worldwide in 2020.”

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