Worrisome Signs Series: World Trade Suffers Further Setback in 2016

Worrisome Signs Series: World Trade Suffers Further Setback in 2016

According to data from CPB Netherlands Bureau of Economic Policy Analysis, global trade suffered further setback in January, to start the year, posing doubts, whether global economy can actually recover, without key component, trade, slipping further.

• As per latest figure available, World trade declined by -0.4% in January from December level and down about -1.1% from a year ago in volume terms. In December trades were up 1%.
• Imports were up 0.2% in January, led by 1.1% increase in advanced economies, while it declined 1% for emerging market economies. Imports were up 2.1% in Japan and 1.5% for Euro area, while declined by -0.6% for United States. Among the EMEs, biggest drops were seen in Africa and Middle East (-1.8%), followed by Central and Easter Europe (-1.1%) and Asia (-0.9%).
• World exports were down -1% in January, largely due to -1.2% decline for advanced economies and -0.8% for emerging market economies.
• Picture was much worse in US Dollar terms. Trade declined -3.9% in January, same for both exports and imports.
  

World trade index, has now declined by more than 23% since summer of 2014, indicating that lower oil price and stronger Dollar among the key reasons. The index has now fallen below the trough seen during 2008/09 financial crisis and to level last seen in early 2006.

Any recovery without improvement in trade likely to remain fragile.

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