Global trade shows signs of recovery as EU’s imports and exports strengthen

The US was the only other major region that posted positive growth in both trade metrics, Kiel Institute says

Global trade is showing signs of recovery, following a projected rise in April driven by the strength of the EU’s imports and exports, a study has found.

Activity is estimated to have posted a 1.5 per cent monthly growth in April, picking up “somewhat more strongly” following a period of weakness in the winter half-year, which covers October through March, the Kiel Institute for the World Economy said in its monthly update.

This is, however, down from the 2.1 per cent expansion global trade recorded in the same month in 2022, according to the Germany-based economic research institute.

Global activity was anchored by the EU, which posted positive trade figures for both exports and imports, at 2.7 per cent and 2.2 per cent, respectively, the Kiel Institute said.

Imports in Germany climbed 2.2 per cent, but exports declined 0.7 per cent, which “paints a less clearer picture” for Europe’s biggest economy, it said.

Europe’s biggest economy doubled its gross domestic product growth forecast for 2023 to 0.4 per cent from 0.2 per cent in late January after it made it through the winter period without major energy problems, Berlin said last month.

“Intra-European trade in particular is benefiting, as is France’s trade in goods. But also neighbours outside the single market such as the UK, Norway and Switzerland display a positive development in April,” Vincent Stamer, head of the Kiel Trade Indicator, wrote in the study.

Global trade has recovered from the effects of the Covid-19 pandemic, but has since had to face multiple macroeconomic and geopolitical challenges, including decades-high inflation, consecutive interest rate hikes from central banks and the effects of the Russia-Ukraine war that has hit supply chains.

World trade growth is expected to decline this year to 2.4 per cent, despite an easing of supply bottlenecks, before rising to 3.5 per cent in 2024, after growing by 5.1 per cent in 2022, the International Monetary Fund said last month.

Global economic growth is projected drop to 2.1 per cent this year, compared to an earlier projection of 2.2 per cent, from 3.1 per cent in 2022, the UN Trade and Development Conference said in its latest Trade and Development Report Update released last month.

The US was the only other major region tracked by Kiel to record growth in both metrics: exports inched up 0.6 per cent, while imports posted the highest growth of 3.4 per cent, the study showed.

Despite a “very weak March, no counter impulse can be seen in the indicator values for exports. Imports, however, are likely to make up lost ground,” Kiel said.

US economic growth slowed to 1.1 per cent in the first quarter of 2023, as the possibility of a mild recession increases, the Commerce Department said last month.

Inflation in the world’s biggest economy slowed again in March as the Federal Reserve’s interest rates help to ease price pressures on households and businesses.

China, the world’s second-biggest economy, recorded a 1.3-per cent decline in exports, as imports rose 0.5 per cent in April, the Kiel index showed, following a negative winter half-year in the midst of strict lockdown measures meant to stem the spread of Covid.

“Apparently, the economic recovery after the end of the zero-Covid policy leads to higher domestic consumption, but currently not to increased foreign trade,” Mr Stamer said.

Meanwhile, the volume of standard containers shipped worldwide also rose again slightly in April to almost 14 million units per day, confirming the upward trend of recent weeks, Kiel said in the study.

Since the start of the weak winter phase in October 2022, the volume of goods shipped globally in containers has recovered by about 3 per cent, it said.

Freight activity in the Red Sea the key maritime trade route between Europe and Asia the 600,000 standard containers shipped per day mark was exceeded in April for the first time since the traffic jam during the Ever Given accident in the Suez Canal two years ago, Kiel said in the study.

This resulted in closing the gap between actual and expected freight volumes, calculated from average trade volumes from 2017 to 2019, it said.


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