Krishen Rangasamy, analyst at National Bank of Canada, explained that the world economy is on track for the first drop in volume in two years and with the “trade war” aheadits unclear that volumes could see a recovery.
Key Quotes:
“Latest data from the CPB suggests the world economy is on track to see a drop in trade volumes in Q2, and that for the first time in two years. With the world economy seemingly moving towards a full blown trade war, it’s unclear if global trade volumes can bounce back quickly. And since a deceleration in trade flows has historically been associated with slower world GDP growth, investors are rightly concerned about protectionist policies ─ in the past two weeks the MSCI All-Country World index has lost about 3%.”
“The moderation in global trade flows seems to be hurting the Eurozone the most as evidenced by disappointing PMI data for the second quarter after a weak first quarter. That should not be surprising given the zone’s relatively high exposure to trade.”
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