One question now dominates the global macro discussion: has subdued global growth and trade become the norm in the post-crisis world?
That is, have lackluster growth and trade become structural and endemic rather than transient and cyclical?
Those are the burning questions that keep central bankers (not to mention sellside economists) up at night and they are front and center at the G-20 in Shanghai.
Warning signs abound. The Baltic Dry is in a veritable free fall. Germany’s manufacturing juggernaut is showing signs of faltering. The BRICS have ceased to be a reliable driver of global growth. US freight volumes are falling for the first time in years. And the list goes on.
“We have seen this burst of globalization, and now we’re at a point of consolidation, maybe retrenchment,” WTO chief economist Robert Koopman said last autumn. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should.”
As we noted earlier this month, to the extent Maersk is a bellwether, things are looking pretty grim. Maersk Line - the company's golden goose and the world's largest container operator - racked up $182 million in red ink last quarter and the outlook for 2016 isn't pretty either. The company now sees demand for seaborne container transportation rising a meager 1-3% for the year.
On Thursday we got the latest evidence that the wheels are falling off. According to new data from the Netherlands Bureau of Economic Policy Analysis’s World Trade Monitor, global trade (defined as the value of goods that crossed international borders) plunged nearly 14% in 2015.
That's the first contraction since 2009.
"The new data released on Thursday represent the first snapshot of global trade for 2015," FT notes. "But the figures also come amid growing concerns that 2016 is already shaping up to be more fraught with dangers for the global economy than previously expected."
While the numbers weren't as dire in volume terms, they certainly look rather "recessionary" and "deflationary" in dollar terms. Have a look:
Similarly, have a look at the following alternate measure:
So again we say the following: up to and until such a time as central bankers figure out how to print trade, the global economy is in very deep trouble and it's just a matter of time before the worldwide deflationary supply glut gets "liquidated" - literally...