World trade outlook positive despite trade war threat


World trade growth flattened in the second quarter, but despite the threat of a US – China trade war prospects remain positive according to Global Kuehne + Nagel Indicators (gKNi).

The gKNi World Trade Indicator provides a real time assessment of global economic activity ahead of official trade data which is published two months later and stood at 140.2 points at the end of June. Year-on-year the indicator is up 10.1%, however on seasonally adjusted US dollar terms was down 0.1% month-on-month, and 0.5% lower than a all time high in February.

The slight drop in the the June month-on-month number needs to be viewed in context of a high benchmark in the first quarter with world trade surging 4.5% quarter-on-quarter. The second quarter figures are some 11.5% up on a year-on-year basis.

“After the strong first quarter 2018, global trade remained virtually unchanged in the second quarter. Regardless of the political implications, the prospects for the near-future are positive. All regions are again showing a slight upward trend in foreign trade as an early indicator of economic activity in general,” a World Trade Indicator update said.

Container port figures for the second quarter indicate that the issue for the box shipping industry are overcapacity in terms of vessels rather than lack of trade volume growth.

“It is noteworthy that container traffic on the oceans accelerated significantly in the second quarter (+ 1.9%). The main drivers of this development were the ports in the US and China,” the update said. US ports saw a 2.5% jump in container traffic in the second quarter compared to 1.7% in the first quarter, while sea freight in China was up 1.2% in the second quarter compared to -0.3% in the first quarter.

Looking ahead gKNi was upbeat about the trade outlook in coming months despite the looming threat of a trade war. “The economies in Asia and North America recorded a high growth rate in June (YoY). This trend is expected to continue in July, according to LogIndex forecasts. The highest rate of increase in July is predicted for China and India. In general, world trade is experiencing a synchronous uptick in all regions,” it said.

João Monteiro, managing director at LogIndex and head New Business Kuehne + Nagel Group commented: The prospects for the near future are brightened with a sound development in China, India, and the United States. The trade tensions had so far no direct negative impact on the physical trade in goods. However, these political implications are clearly a cause for concern. The downside risks are increasing.”