World trade is losing momentum and likely to contract over the next three months, according to the DHL Global Trade Barometer (GTB).
The overall trade outlook is down two points to an index value of 45, and DHL says the downward tendency is largely moderate and steady, neither indicating an acceleration of the decline nor a bottoming out.
Airfreight has seen a bigger decline, down three points to 42, compared to containerised ocean trade falling two points to 46.
Tim Scharwath, CEO of DHL Global Forwarding Freight says: “According to the DHL Global Trade Barometer the year will probably end with moderate world trade. However, we’ve to bear in mind where we come from: The rapid growth world trade has undergone in recent years was like climbing the Mount Everest. Now, we are on the descent, but we are still breathing altitude air.”
Six out of seven surveyed countries recorded mildly negative trade outlooks, with both Germany and China falling three points.
For Germany, the fall was mainly caused by weak airfreight, which dropped seven points to 45.
The slowdown in China is due to both air and ocean trade proving sluggish, leaving China with the weakest growth outlook of all surveyed countries.
The Chinese downturn is mainly due to the trade war with the US, and US trade is also expected to contract further, though the outlook remains unchanged at 44.
Eswar Prasad, professor of trade policy and economics at Cornell University in Ithaca, New York says issues including trade tensions and political instability have hit investment and productivity growth, while household consumption is weakening.
He says: “The latest DHL Global Trade Barometer update shows that international trade flows have been adversely impacted by these factors. The declining indexes for China and the US, the two main drivers of global growth, portend a worsening global economic outlook. Overall, this GTB update paints a sobering picture of gloomy prospects for the world economy and global trade for the remainder of this year.”
Japan and the UK were the only countries with positive trade outlooks in the previous update but have recorded the highest losses.
Japan fell five points to 48, mainly due to air trade dropping seven points to 42.
The UK had already recorded a downward tendency and has dropped four points to 49 due to airfreight decreasing four to 49 and ocean by five to 48.