Has the Global Economic Slowdown Stopped?

Growth in trade flows has been close to zero without entering the negative zone for several months.

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Conjuncture Global demand Economic trends

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Grafico Scatter Ball

During the first half of 2019, the slowdown in the world economy stopped one step away from recession. The following graph charts the year-on-year (YOY) growth in total world trade flows at constant prices, and shows measurements of the same economic phenomenon from two different sources. The first information source is the CPB World Trade Monitor (Netherlands Bureau for Economic Policy Analysis); the second source is the Ulisse Information System, accessible via ExportPlanning Analytics.

Source: ExportPlanning.

The graph indicates world trade at constant prices and clearly shows growth slowing down throughout 2018, but then entering a substantially stable period during the first half of 2019. Only in a few months were lower growth figures recorded. This dynamic of the international trade cycle is perfectly in line with that of world industrial production. The latter, after a long slowdown, has for some months been growing at a rate close to 1.5% (see the article Effects of Global Growth on Commodity Prices). This is definitely still at a low level, but still far enough from a situation of decline in world industrial production.

Has the danger passed? Not exactly.

Currently, we know that the economic forces that caused the slowdown in the world trade cycle - such as the collapse in demand for diesel cars, the trade war initiated by the Trump administration, lower growth of the Chinese economy, lower investments in plant, machinery and equipment - have been partially mitigated through consumption and the real estate cycle, encouraged with expansionary fiscal and monetary policies.

The further evolution of trade cycle determinants is subject to a high degree of uncertainty.
However, we can discover something more about the current situation of the world economy through the analysis of geographical components and sectors of world trade: these topics will be the subject of two upcoming ExportPlanning articles.