Global trade continues to disappoint, strong headwinds ahead - ING

Maarten Leen, Head of Macro Economics at ING, points out that international trade in goods continues to disappoint and warns that the withdrawal of the United States from the Trans Pacific Partnership is yet another sign that world trade is facing strong headwinds.

Key Quotes: 

“World trade in goods was 0.4% lower in September compared to August, according to the CPB World Trade Monitor released today by The Netherlands Bureau of Policy Analysis (CPB).” 

“Although the August reading has been revised up to a monthly increase of 1.7% (initial estimate 1.5%), the September decline means that the volume of world merchandise trade has basically moved sideways so far this year. This is not only disappointing in absolute terms but also when compared to economic activity.”

“After Brexit and the arduous conclusion of the EU-Canada trade agreement CETA, the announcement earlier this week of president-elect Donald Trump to withdraw the US from the Trans Pacific Partnership is yet another sign that world trade is facing strong headwinds.”

“This reinforces our expectation, following i.a. an increase in protectionist tendencies and a slowdown in global value chain expansion, that the ratio of world trade growth to economic activity will remain below its pre-crisis long-term average for many years to come.”