News / Trade disputes create no winners: DHL barometer reveals impact of US-China clash

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For the first time since its inception, DHL Global Forwarding’s quarterly trade monitor is set to show a contraction of global trade, indicating the impact of the China-US trade war.

In fact, the only major economy that may see some growth in trade volumes over the next quarter, according to the DHL Global Trade Barometer published today, is the UK – which many may find ironic, given the continuing political crises over Brexit and its leadership.

“Given the still unresolved Brexit uncertainties, this result looks somewhat counterintuitive. It might be an indication that companies are increasingly stockpiling inventories in face of the risk of a hard Brexit at the end of October,” the report says.

All other major economies covered by the GTB – comparing China, the US, Germany, India, Japan and South Korea – are set to see contracted or diminished growth prospects.

Eswar Prasad, professor of trade policy and economics at Cornell University in the US, said: “Growth is weakening in the key drivers of the world economy. Most macroeconomic and labour market indicators point to a cooling of US growth and financial market sentiment has been hurt by trade tensions.

“The Chinese government’s stimulus measures appeared to be stabilising growth, but persistent trade tensions are again dragging down growth momentum in China.

“The German growth revival looks fragile, while India’s growth has hit the skids, with rising doubts about the prospects of major economic reforms.

“A synchronised slowdown of the world’s major economies could affect trade volumes, if the uncertainty continues to dampen consumer demand and business investment.”

The GTB index, where a figure of 50 represents no change in outlook, predicts that both the air and ocean freight sectors will see volume contraction in the next three months, despite the fact that the peak shipping season is set to get under way. Air trade declined six to 49 points and the ocean trade by eight points to 48 index points.

DHL Global Forwarding chief executive Tim Scharwath said: “Amid rising US-Chinese tensions, the slightly negative outlook for global trade for the third quarter of 2019 does not come as a complete surprise. The latest GTB clearly illustrates why trade disputes create no winners.”

However, he added that when offset against relatively strong growth in the first half of the year, there were still some grounds for optimism.

“From a year-to-date perspective, world trade growth has still been positive. Hence, we remain confident in our initial prognosis that 2019 will be a year with overall positive, but slower, trade growth,” he explained.

Nonetheless, forwarders with significant exposure to the US should be prepared for a difficult quarter, as it dropped 11 points to 44, “mainly driven by a negative outlook for major export categories”.