Group Economics
Global Watch Global trade regaining traction
Arjen van Dijkhuizen, + 31 20 628 8052
8 July 2015
Global trade has picked up recently, after the slowdown in Q1 Emerging economies, particularly emerging Asia, drove export slowdown in Q1 Global trade not a bad omen for global growth Global trade not ‘out of sync’ with global growth
Global trade picks up in April
Sharp movements in March mostly corrected in April
Index, 2005 = 100
Price index (USD per point)
140
4000
Underlying the general picture, we saw some sharp regional movements in March. US import volumes and Latin American export volumes rose sharply together, with the US being Latin
135 3000 130
America’s key export destination. Next to that, Japanese import volumes and Asia’s export volumes jointly declined
125
2000
sharply in March. What might even be more striking is that most of these sharp underlying movements seen in March
120 1000 115
already showed a clear correction one month later, as US import volumes slowed again while Japanese import volumes and Asian export volumes recovered.
0
110 10
11 12 13 CPB world trade index (lhs)
14 15 Baltic dry index (rhs)
Divergence between emerging and advanced economies Trade developments in the first part of this year show clear
Sources: CPB, Thomson Reuters Datastream.
differences between various country groups and regions. Let Global trade picks up, after slowdown in Q1
us for instance look at export volumes, taking three months
According to CPB data, global trade picked up in April, after
moving averages of monthly changes. The chart clearly shows
having lost momentum in Q1. World trade was down by -1.5%
that the drop in global export volumes shown in Q1-2015 was
yoy in Q1 (2014-Q4: +1.2%), according to CPB’s indicator for
largely accounted for by emerging economies. Despite the
global merchandise trade. However, in April the index showed
improvement in April, EM export volumes are still 2.3% lower
its first rise in four months, rising by 0.3% mom, although it still
than their December 2012 peak. Meanwhile, export volumes of
remained below the December 2014 peak. The Baltic dry index
advanced economies have recovered recently and in April
also moved up recently, although remaining close to post-
even surpassed their previous peak reached in November
financial crisis lows. The latter index measures the cost of
2014.
moving major raw materials over sea and is frequently used as global activity indicator, though it has been impacted over
EMs drive drop in global export volumes Export volumes, %mom, 3 months moving averages
recent years by the oversupply of vessels.
3
Sharp moves in March partly corrected in April
2
Index
1
150
0
140 130
-1
120
-2
110
-3 10
100
11
12
Advanced economies
13
90 10
11
12
13
Imports Japan Exports Asia Sources: CPB, Thomson Reuters Datastream.
14 Imports US Exports Latin America
15
14
Emerging economies
Sources: CPB, Thomson Reuters Datastream.
15 World
2
Global trade regaining traction – 8 July 20 015
… and a between e emerging Asia and Latin Am merica Loo oking at EM exxport volumes in the first part of this year, we e
ngoing drag to global growth. In our view, do omestic deman nd on
also o see clear diffferences betwe een different re egions. Asian
eu urozone and Ja apan. Meanwhiile, in China, we w assume thatt the
exp port volumes ha ave contracted d relatively strongly in recent
ea asing measures s taken by the Chinese autho orities will
mo onths. This parttly relates to falling import dem mand from keyy
co ontribute to stabilisation of doomestic demand d.
is picking up in advanced a econnomies such as s the US, the
trad de partners succh as Japan an nd China. For some s countriess (e.g g. China itself, Hong Kong an nd South Korea a) this also
Global G growth h and trade no ot ‘out of syn nc’
reflects an erosion of external co ompetitiveness s given the rea l
Full year growth, %yoy %
ective apprecia ation of their cu urrencies. By co ontrast, export effe
% yoy y
1 15
6
volumes out of La atin American countries c clearly have picked mport demand up recently, profitting from an accceleration of im
1 10 4
5
m the US. from
0
2
-5
Ex xports have s slowed in Asia, accelerate ed in LatAm
-10
0
Export vo olumes, % mom, 3 months moving averages
-15
4
-2
-20 6 98 00 02 04 06 08 10 1 12 14 92 94 96
2
Real GDP (lhs) 0
World tradee (rhs)
So ources: CPB, Thom mson Reuters Dattastream
-2
ot ‘out of syncc’ with global growth g Global trade no ooking from a lo onger-term perrspective, it is not clear to us Lo
-4 10
11
12 Asia
13 Latin n America
14
1 15
that global trade developmentss since the glob bal financial crisis ut of sync with global growth. Obviously, glo obal arre that much ou
C CEE
tra ade growth has s sharply fallenn in recent yearrs and remainss Sou urces: CPB, Thom mson Reuters Data astream.
cle early below pre e-financial-crisiis levels. Howe ever, global grrowth has also coming down ssignificantly in recent years, with w
Sttrong US dollar makes Asian ‘fixers’ more m expensiv ve Export vo olumes, % mom, 3 months moving averages
glo obal growth falling from arounnd 5.5% in 201 10 to around 3..5% las st year. Moreover, the weaknness of global trade t in the firsst qu uarter of this ye ear goes hand in hand with lo ow global growtth
China
in the same quarter, driven dow wn by key econ nomies such ass
Ho ong Kong
the US and Chin na. We would liike to add that world trade
S. Korea
atterns tend to be more cycliccal than global growth pattern ns. pa
Siingapore Malaysia
In conclusion
Taiwan
Our main messa age is that globbal trade has re ecently picked up, u
India
n in Q1. The reecent pick-up of o global trade affter a slowdown
Thailand
ind dicators lends support to our view that global trade is likely to
In ndonesia 0
10
20
30
4 40
follow the expected improvemeent in global growth momentum, ather than being g an ongoing ddrag to global growth. g Moreovver, ra
Sou urce: EIU
loo oking from a lo onger-term persspective, globa al trade de evelopments since the global financial crisis s do not seem to t
Glo obal trade nott a bad omen for f global grow wth The e question has risen whether the slowdown of global trade e see en in the first m months of this year y could be a bad omen for global growth. We e do not think that t necessarily y has to be the e se. The recent pick-up of glob bal trade indica ators (and the cas corrrection of some sharp March h movements seen in April) lends support to o our view that gllobal trade is likely to follow th he provement in global domesticc demand, rathe er than being a an imp
be e much out of sync s with globaal growth.
3
Global trade regaining traction – 8 July 20 015
nd out more abo out Group Eco onomics at: http ps://insights.a abnamro.nl/en n/ Fin O. It is solely intended to provide financial annd general information on economics. The infformation in this docum ment is strictly proprieta ary and is being supplie ed to This document has been prepared by ABN AMRO s for your informattion. It may not (in who ole or in part) be reprod duced, distributed or paassed to a third party or o used for any other purposes than stated abbove. This document is s informative in nature and you solely does s not constitute an offerr of securities to the pu ublic, nor a solicitation to make such an offer. r. eliance may be placed d for any purposes wha atsoever on the informa ation, opinions, forecassts and assumptions co ontained in the docume ent or on its completenness, accuracy or fairness. No representation n or No re warra anty, express or implie ed, is given by or on be ehalf of ABN AMRO, orr any of its directors, offficers, agents, affiliate es, group companies, or o employees as to the accuracy or completeness of the information n conta ained in this documentt and no liability is acce epted for any loss, aris sing, directly or indirecttly, from any use of suc ch information. The views and opinions expreessed herein may be subject s to change at an ny given n time and ABN AMRO O is under no obligation n to update the informa ation contained in this ddocument after the datte thereof. Before investing in any pro oduct of ABN AMRO Ba ank N.V., you should obtain o information on va various financial and oth her risks and any poss sible restrictions that yoou and your investmen nts activities may encou unter unde er applicable laws and regulations. If, after reading this document, you y consider investing in a product, you are advised a to discuss such an investment with yyour relationship manager or personal adviso or and chec ck whether the relevantt product –considering the risks involved- is appropriate a within yourr investment activities. The value of your inve estments may fluctuatee. Past performance is no guarantee for future e returrns. ABN AMRO reservves the right to make amendments a to this ma aterial. © Co opyright 2015 ABN AM MRO Bank N.V. and affi filiated companies ("AB BN AMRO").