K+N: Trade tensions taking hold
04 / 09 / 2018
“After a strong gauge in July, the new data show a negative trend. The sharpest slowdown is expected for emerging markets, which are most exposed to any impact from rising trade tensions. In September, a major setback in exports is expected in South Korea, Japan, Taiwan, India, and Brazil.”
So says the latest gKNi World Trade Indicator powered by LogIndex, the data company that forms part of the Kuehne + Nagel Group.
It’s a rather gloomy outlook but perhaps not one that comes as a surprise, given the prospect of escalating trade wars which is continuing to make investors nervous. World trade is cooling off, with international disputes beginning to take effect on the real economy, and LogIndex expects the downturn to accelerate in September.
Getting into a little more detail, the report notes that while advanced economies are holding steady, Japan and emerging markets have “lost considerable momentum” as demand for their exports has been shrinking.
Indeed, it forecasted: “Foreign trade will reach negative territory in South Korea, Taiwan, and Japan (YoY). In particular, exports are expected to fall strongly in South Korea (-11.8%), Japan (-10.2%), India (-9.8%), Taiwan (-8.0%), and Brazil (-4.8%).
“Also Chinese export growth YoY will likely slow down from 12.2% in July to 7.0% in August and 4.5% in September.”
The downward trend in foreign trade appears to correlate with a slowdown in the growth of global industrial production, which LogIndex predicts will reach its lowest level since July 2015 this month.
Highlighting the volatility of the global market, the report said: “As for August, over 70% of the economies are experiencing a decreasing dynamic with declining year-on-year rates. The picture has changed completely since July, when the majority of countries were on an upward trend again” after several months of decline.
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