Global trade up 1.2% in August as major economies show ‘mixed picture’
Global trade in August increased 1.2 per cent month-on-month, despite continued supply chain bottlenecks and congestion at major ports, the Kiel Trade Indicator data shows.
Supply chain woes and congestion in container shipping are becoming “more entrenched” and are affecting the global exchange of goods, data compiled by the Kiel Institute for the World Economy showed.
“Inflation mechanically increases exports in many countries, as rising prices also increase nominal trade values as typically reported in official statistics. In fact, however, price-adjusted exports of major industrialised countries are still below pre-pandemic 2019 levels,” said Vincent Stamer, head of the Kiel Trade Indicator.
“Supply bottlenecks are likely responsible in part for this development. Rising energy prices will put further pressure on the competitiveness of European companies in the short and medium term.”
The Covid-19 pandemic highlighted significant challenges in the logistics sector, with many cargo customers struggling to find shipping containers amid labour disruption in the industry. The acute supply chain bottlenecks have led to congestion and delays at ports, a shortage in containers and a sharp rise in the cost of shipping goods.
The latest World Trade Organisation’s Goods Trade Barometer issued on August 23 suggests that the global goods trade continued to grow in the second quarter of 2022 but that the pace of growth was slower than in the first quarter and is likely to remain weak in the second half of the year.
The WTO projects that the Russia-Ukraine war could lower global gross domestic product (GDP) growth by 0.7 to 1.3 percentage points, bringing it to between 3.1 per cent and 3.7 per cent for 2022, it said in an April report.
The organisation revised down its forecast for global trade growth this year to 3 per cent from 4.7 per cent earlier, due to the Russia-Ukraine war. Global trade growth in 2023 is expected to be 3.4 per cent.
Trade data from major economies and regions show a mixed picture in August, according to the Kiel Trade Indicator data.
Germany’s trade in August was in the red, with imports declining 0.2 per cent and exports down 0.7 per cent from the previous month.
For the EU, trade was little changed, with imports decreasing 0.1 per cent and exports up 0.1 per cent, and likely to be at the level of the prior month.
In the US, imports increased 1.8 per cent compared with July, while exports rose 0.3 per cent.
For China, exports were down 4.6 per cent and imports rose 0.3 per cent.
In Russia, exports rose 2.3 per cent, above the previous month’s level, while imports remained at the same level.
Germany is exporting around 7 per cent fewer goods than in 2019, Kiel data showed.
The gap is similar for France (almost 8 per cent) as well as the UK (6 per cent) and smaller in Canada (3.5 per cent) and the US (1 per cent).
Only Italy and Japan are exporting above their pre-Covid levels again in the G7 group.
World trade is more than 6 per cent above its pre-Covid level.
Since the start of 2022, freight rates for maritime trade from Asia to Northern Europe and North America’s West Coast have dropped from more than $14,000 per container to $4,000 and $8,000, respectively.
“However, congestion is preventing a return to pre-pandemic levels. High transportation costs are hindering a further recovery in global trade,” Mr Stamer said.
Currently, about 11 per cent of all shipped goods are stuck, Kiel data showed.
Congestion in the North Sea is the most serious for the first time, the institute said, with more than 2 per cent of global freight capacity at a standstill there, and can neither be loaded nor unloaded.
However, the queue off the US states of South Carolina and Georgia, where the important container port of Savannah is located, is skyrocketing, it said.
Outside China’s ports, congestion is on a cyclical downward trend.
In the Red Sea, the most important sea trade route between Europe and Asia, 16 per cent fewer goods are currently being shipped than would be expected under normal circumstances, Kiel said.
Source: National News