Slump in world trade is just as bad as the decline sparked by the dotcom crash, warn analysts
A recent collapse in global trade is the worst since the financial crisis and as steep as during the recession of the early 2000s, according to new figures from the Dutch government.
World trade volumes slumped 1.8 per cent in the three months to January compared to the preceding three months as factories grapple with a deepening global industrial downturn, the CPB Netherlands Bureau for Economic Policy Analysis revealed.
An industrial slump has been triggered by a perfect storm of factors, including China’s slowdown, the car industry downturn, Brexit paralysis and Donald Trump’s attempt to upend the international trade system with tariffs on European and Chinese goods. The U.S. has imposed higher taxes on Chinese imports worth US$250 billion in the tit-for-tat tariffs battle with industrial hubs in Asia and Germany suffering sharp drops in trade in recent months.
The sudden loss in momentum has approximately been as severe as the aftermath of the dotcom bubble in 2001, when volumes slid as much as 2.2 per cent.
The International Monetary Fund warned last week that global trade “has slowed sharply from its peak in late 2017” as it downgraded its 2019 growth forecast for the third time in six months.
It warned that trade growth will slow further this year followed by “some recovery” in 2020.