DHL Global Trade Barometer Predicts Sluggish Trade Momentum

The latest developments continue a downward trend which the GTB has been recording for several quarters since mid-2018.

The current contraction is also the first one since 2015, when the GTB – which takes into account historical data from 2013 onwards – measured more than a month-long decline of global trade volumes in the middle of the year.

“Amidst rising US-Chinese tensions, the slightly negative outlook for global trade for the third quarter of 2019 does not come as a complete surprise. The latest GTB clearly illustrates why trade disputes create no winners. Nevertheless, some major economies such as Germany continue to record positive trade growth.”

“And from a year-to-date perspective, world trade growth has still been positive. Hence, we remain confident in our initial prognosis that 2019 will be a year with overall positive, but slower trade growth.”

Tim Scharwath, CEO of DHL Global Forwarding, Freight

Latest GTB results show negative effects of trade wars

“Growth is weakening in the key drivers of the world economy. Most macroeconomic and labor market indicators point to a cooling of U.S. growth and financial market sentiment has been hurt by trade tensions.”

“The Chinese government’s stimulus measures appeared to be stabilizing growth, but persistent trade tensions are again dragging down growth momentum in China. The German growth revival looks fragile while India’s growth has hit the skids, with rising doubts about the prospects of major economic reforms.”

“A synchronized slowdown of the world’s major economies could affect trade volumes, if the uncertainty continues to dampen consumer demand and business investment.”

Eswar S. Prasad, Professor of Trade Policy and Economics at Cornell University in Ithaca, NY

US-China trade conflict dragging down global trade momentum

As one of the parties involved in the current trade disputes, the US saw by far the heaviest losses amongst all GTB index countries, with its outlook declining by -11 points to 44.

Those losses were mainly driven by a negative outlook for major export categories. China scores second in terms of losses, with a decline of -7 points to 49 – an index value one point below stagnation.

China’s negative outlook was primarily driven by declining imports in several categories, combined with just minor overall export growth.

Whilst the trade dispute between the two countries has been a looming, growth-impending threat since the GTB’s launch in January 2018, it has never manifested itself as much as now in actual trade forecasts.

Given the US’ and China’s large contribution to the global index, their diminishing trade growth rates contribute to a large extent to the projected global decline.

The still rather mild global trade contraction can be explained because during trade conflicts, trade flows do not merely dry out. Instead, trade routes and supply chains shift into other countries.

On a global scale, this partly offsets the negative effects of trade tensions between countries.

UK trade unaffected by Brexit threat, Germany and India maintaining mild growth rates

In the wake of the overall weakened trade climate, three GTB constituent countries record slower trade growth forecasts while staying above the level of stagnation:

• Germany has registered a mere -1 point decline compared to the previous quarter and now scores 52.
• India loses -6 points, resulting in an outlook of 53 points.
• The UK actually gains +2 points, scoring an index value of 52.

Given the still unresolved Brexit uncertainties, this result looks somewhat counterintuitive. It might be an indication that companies are increasingly stockpiling inventories in face of the risk of a hard Brexit at the end of October.

East-Asian economies with further weakening trade momentum

Besides China, the East-Asian economies of Japan and South Korea record sluggish trade momentum.

The index for Japan has fallen by -7 points and now sits at exactly 50, which indicates stagnating trade dynamics.

South Korea is the third GTB country with a forecasted decline in trade growth for the next three months: On the back of a mild decline with 49 points in March 2019, the outlook further declined by -3 to 46 points.

DHL will release the next GTB by the end of September. To learn more about the DHL Global Trade Barometer, visit logistics.dhl/gtb

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