The SA Daily
16 September 2019
Trade uncertainty a downer
- Global trade uncertainty is affecting global trade volumes and global growth negatively. The IMF’s weighted world trade uncertainty index, based on 143 countries not just China and the US, shows sharply rising trade uncertainty, after having been stable and at low levels for 20 years. The IMF now estimates that the trade uncertainty of 1Q19 could reduce global growth by 0.75 percentage points this year.
- In 2Q19, global trade volumes declined 0.7% q/q (0.4% y/y), after posting growth of 0.1% q/q (0.5% y/y) in 1Q19.
- In 2Q19, world imports and exports too declined, with the decline in imports more pronounced in advanced economies than in emerging economies. Advanced economies’ import volumes declined 0.8% q/q but EM economies were down only 0.1% q/q because of good Africa and Middle East import volumes which grew 1.7% q/q in 2Q19. Advanced economies’ export volumes declined 0.5% q/q in 2Q19, while emerging market export volumes declined more significantly by1.4% q/q.
- In its July World Economic Outlook report, the IMF trimmed the global growth forecast to 3.2% for 2019 (down from the January forecast of 3.5%), noting the risks as to the downside because of trade tensions. Trade uncertainty negatively affects the global economy and, therefore, EM and commodities currencies.
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