Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman
Back in the beginning of March, Søren Skou, the CEO of Maersk the world's largest container-shipper warned that global trade is slowing down. Specifically, he said that global trade growth could slow this year from recent 4% growth rates, as Chinese, Brazilian and Russian economies disappoint.
"Growth from a historical perspective is quite sluggish. It has a huge impact for us as an industry... The economies in Europe are still very sluggish. Brazil, Russia and China: those three economies used to drive a lot of growth, and right now we are not really seeing that to the same extent. The only real bright spot is the US, and even the US is good but not great."
Today we have proof just how accurate Skou was not only about the collapse in global trade in recent months, but that his call for the end of a US decoupling - something that only we called far in advance of the Atlanta Fed extrapolating a 0.3% Q1 GDP - was also spot on.
Presenting the latest data from the CPB Netherlands Bureau for Economic Policy Analysis, according to which in January world trade by volume dropped by a whopping 1.4% from December: the biggest drop since 2011!
From the report:
Based on preliminary data, the volume of world trade declined 1.4% in January from the previous month, following a revised 1.3% rise in December (initial estimate: 0.9%). There was a large negative turn-around in emerging economies’ import volume growth. Growth turned negative in all major emerging country groups, the largest fall occurring in Asia. Import growth decelerated in advanced economies as well, but remained positive due to accelerations in Japan and the Euro Area. At the export side, the decline was spread more evenly across advanced economies and emerging economies. Most regional sub-indices declined, the exceptions being those for Japan, Central and Eastern Europe, and Latin America.
All of this was further confirmed not only by the latest Chinese PMI data, but by every recent data release out of China.
But where things get really scary is not only when looking at global trade volume, which is sliding, but the actual value of trade calculated in USD. It is here that the real devastation for a world whose global reserve currency is still the USD, does the recent collapse in global trade as a result of the soaring value of the US dollar (for all the wrong reasons) become truly apparent.
As the chart below shows, not only did the USD value of trade in January drop to the lowest since late 2009/early 2010, but the annual rate of decline is once again, say it with us, the worst since Lehman.
However, none of the above should alarm anyone: remember - central banks can just print trade with just the flick of a CTRL-P switch.
Underlying data source
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