Global Trade Snaps 2-Year Growth Streak

Global trade volumes stayed roughly flat on the quarter in the three months through June, ending two years of steady growth, amid slumping Asian semiconductor demand and fallout from the US-China trade war.

The global trade volume index calculated by the Netherlands Bureau for Economic Policy Analysis slid 0.8% on the month to 123.7 in June, according to the World Trade Monitor report released by the agency this week. The average for the April-June quarter came to 124.1, the same as the January-March figure. The three-month average had risen for eight straight quarters since April-June 2016, Nikkei reported.

Exports from emerging Asian countries fell 0.7%. This marked the first decline in seven quarters, after a rise fueled by Chinese imports of components and manufacturing equipment from other Asian nations and exports of finished goods from the country. But demand for products such as smartphones hit a lull last quarter, which “may have weighed on trade within Asia,” said Yusuke Ichikawa of the Tokyo-based Mizuho Research Institute.

Others see an impact from the intensifying trade conflict between the US and China. Both sides have already imposed two rounds of tariffs, with more potentially on the way, on top of the broader American levies on steel and aluminum. “Companies have likely stopped trading while they wait and see what happens,” said Yoko Takeda of the Mitsubishi Research Institute in Tokyo.

Some observers worry that if the negative impact of the trade war stretches into this quarter and beyond, global trade growth could fall behind economic growth. Yuto Ito of the Tokyo-based Dai-ichi Life Research Institute estimates that a 1% decline in worldwide trade volume would reduce Japanese exports by 1.82%.