China’s trade to enter contractionary territory
According to the latest data from DHL Global Trade Barometer, China’s trade volumes will likely contract in between June and August 2019 as ongoing trade disputes weigh down ocean trade imports and air exports.
“The Barometer’s latest data was to be expected given that the ongoing trans-Pacific dispute continue to dominate business and trade sentiments,” said Steve Huang, CEO, DHL Global Forwarding Greater China.” Although, certain sectors have maintained relatively strong growth forecasts, China’s trade outlook looks set for further turbulence with the full impact on major industries like technology and consumer goods likely to only become apparent in the medium term.”
The DHL Global Trade Barometer, an early indicator of global trade developments calculated using Artificial Intelligence and Big Data, suggests weakening ocean trade — which slipped 8 points to an index value of 47 — will drive the decline in overall Chinese trade, whilst air trade hangs on precariously to growth territory after dropping 6 points to an index value of 51. Air imports remain relatively strong with Machinery Parts, Temperature or Climate Control goods, and Chemicals and Products still set to grow, albeit at a slowing pace. However, certain bellwether sectors registered significant deceleration including Basic Raw Materials, which fell 14 points to 22; and Consumer Fashion Goods, which declined by 15 points to 37.
“It remains to be seen whether domestic stimulus measures can reignite growth in key industries like the automotive industry, with Land Vehicles and Parts showing a 10-point decline in its outlook since the previous quarter, Huang added. “The GTB is a useful tool for us to anticipate economic developments at an early stage. I am confident that our global presence allows us to balance the economic effects on our organization and stay resilient to changes in global trade dynamics.”
Latest results show negative effects of trade wars
For the first time since its launch in 2018, the Barometer’s results predict a slight decline in global trade between June and August 2019, with its overall world trade outlook dropping to just 48 index points. The continued trade dispute between the US and China has contributed significantly to that decline, with both countries experiencing the largest declines in their trade outlook (-11 points for the US, -7 points for China) out of all countries surveyed by the Barometer.
Commenting on the latest forecast, Tim Scharwath, CEO of DHL Global Forwarding, Freight, said, “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.”
The DHL Global Trade Barometer is an innovative and unique early indicator for the current state and future development of global trade. It is based on vast amount of logistics data that are evaluated with the help of artificial intelligence. The indicator is published four times a year and the next release date is scheduled for September 2019.