23 December, 2015
Raoul Leering, Head of International Trade Research at ING Bank explained world trade volume shrank by 0.5% in October (month-on-month growth in volumes), according to the Netherlands Bureau for Economic Policy Analysis (CPB).
"But the upswing for September has been revised upward (+0.8% instead of 0.5%). The less volatile three months average (momentum) is still positive but the average growth of 1.4% is lower than the 1.9% in September.
The decline of world trade is surprising in the light of the positive data release on industrial production which usually has a positive effect on world trade. According to CPB world industrial production grew by 0.1% (momentum +0.5%), continuing its way up that started last June (with the exception of the marginal decline of 0.1% point in August).
Import figures were strong in October: a worldwide rise of 0.7%, with a strong rise of 2.6% for emerging Asia. But there was a loss of momentum for exports (-1.6%), especially for the US and emerging markets.
Import demand from the US and especially Japan shrank and the growth of demand from the Eurozone diminished. For 2015 world trade will grow only 1.1%, we expect. This is the lowest growth rate since the great trade collapse of 2009.
Notwithstanding the setback in October, ING expects world trade to resume its recovery in the months to come. Industrial production in the Eurozone surprised on the upside in October with high growth in the production of durable and capital goods, both goods categories that are over represented in world trade.
The European outlook will depend, among other things, on the development of import demand in emerging markets. With respect to this, the acceleration of production growth in China in October and November is a positive sign. Although it is too early to state that the slowdown of industrial growth in China lays behind us, the recent months are encouraging. Especially the pick-up in infrastructure investment and acceleration of private investment.
We reiterate our forecast of 3.4% for world trade growth in 2016, 20% above our growth forecast for world GDP. Even if world trade grows only moderately much next year, the growth rate for 2016 will benefit from the fact that trade is on a higher level now than during the trough of 2015."
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