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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.”