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International merchandise trade is falling

Written by Nick Blenkey
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Source: OECD

Here’s a reality check for those who think that world seaborne trade can only keep growing. Figures released by the OECD yesterday show that G20 nations’ international merchandise trade, seasonally adjusted and expressed in current US dollars, continued its downward trend in the second quarter of 2019, with exports contracting by 1.9% and imports by 0.9%.

Exports contracted by 5.3% in China (to their lowest level since Q4 2017) and by 1.1% in the United States (their lowest level since Q1 2018). Imports rose marginally in both countries, (by 0.6% in China and 0.3% in the United States), on the back of a pick-up in U.S.-China bilateral trade, possibly reflecting stockpiling in anticipation of US tariff measures that became effective on 10 May and Chinese retaliatory measures (implemented on June 1). United States exports to, and imports from, China increased by 2.7% and 0.2% respectively in the second quarter of 2019 (but remain significantly below the highs seen in Q3 2018, by 17.4% for exports and 10.7% for imports).

In the European Union, exports and imports contracted by 1.7% and 2.3% respectively. France’s exports fell by 0.3% and imports by 0.7% while Germany’s exports fell by 3.0% and imports by 1.7%. Italy’s imports fell by 0.6% (the fifth consecutive quarterly fall), though its exports saw a modest increase of 0.1%. Amid continuing Brexit uncertainty, the United Kingdom saw significant contractions in both exports (minus 7.1%) and imports (minus 12.6%).

Russia’s exports fell by 7.4%, despite higher crude oil prices. Saudi Arabia’s exports also fell significantly by 3.5% with imports contracting by 11.5%. In Korea, exports fell by 1.6%, the third straight quarterly decrease, and are now 12.3% below the recent high recorded in Q3 2018.

In Argentina, imports contracted by 6.4%, to levels one-third below recent highs, as the Argentine peso depreciated by 12.5% against the U.S. dollar (86.7% over the last 4 quarters). Turkey’s imports also fell significantly (by 6.4%), as the Turkish lira continued to depreciate (by 9.5% against the US dollar in the second quarter of 2019).

Only a few G20 economies saw merchandise trade exports increase in the second quarter of 2019: Australia (by 6.3%), Canada (6.4%), Mexico (2.4%) and Japan (0.2%).

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