World trade up, but not out of the woods yet - ING

Raoul Leering, Head of International Trade Analysis at ING, notes that the Netherlands Bureau of Policy Analysis (CPB) released data yesterday that shows that the volume of trade in goods grew by 0.6% in April.

Key Quotes

“It is not so much the positive start to 2Q, but rather the upward revision of growth in 1Q that really catches the eye. After reporting a 1Q contraction in world trade of 1.7% last month, CPB has now revised the 1Q figure up to -0.4%. Including the growth in April, world trade is now at the same level as the average monthly trade level in 4Q15.

CPB has revised the trade figures upward across the board. The large contraction of import demand from Emerging Asia that CPB reported last month has been cut back to half and is now 3.6%.

At the same time, the data for April show that trade is not out of the woods yet. The improvement of the 1Q Eurozone and US trade figures continued into April, where both large trading blocs reported positive growth in import demand. But the imports of Emerging Markets contracted 2.4% in April, with Emerging Asia leading the pack (-3.4%).

Although world trade is not doing as badly as previously thought, the development of trade is still very weak. ING’s report World trade: No revival in sight yet shows that the cooling of the expansion of global value chains has contributed to the sluggishness of trade growth over the last couple of years. Moreover, the trend in Chinese industry to substitute foreign suppliers of intermediates for domestic suppliers is a structural development that will also put pressure on trade. Last but not least, the rise of protectionism contributes to the weak performance of world trade. If the UK votes for a "Brexit", world trade could take another blow.”