- World trade growth expected to be sluggish in 2020 in value terms. We expect the value of trade to grow by around 3.7% globally. Taking into account a projected rate of inflation of 3.5%, globally, this suggests that trade will experience another difficult year.
- The ASEAN region’s trade is expected to grow at a rate that is slightly faster than the average for the world at 4.2% for intra-regional trade and 5% for extra-regional trade. Much of the extra regional trade is accounted for by nearly 9% growth in trade with China. This, combined with the fact that extra and intra-regional trade have grown on an annualised basis of nearly 10% since 2016, suggests that there is some redistribution effects of the US-China trade conflict which is becoming obvious in the data.
- The oil exporting regions have suffered over the past five years and external export growth has been negative for all of them. However, we expect South America, the Middle East and North Africa and the African Continent Free trade area’s exports to expand substantially during 2020 reversing this trend.
- The EU27’s extra and intra-regional trade is set to grow over the next four years without the UK but the significant growth in intra-regional trade has already happened. Between 2016 and 2020 it appears that trade will have grown by nearly 7% within Europe, with 9% growth between 2018 and 2019. We expect intra-regional trade growth to remain positive but to slow between 2020 and 2023 suggesting that much of the re-shoring of supply chains from the UK back to the EU27 has either already happened or will happen during the course of this year.
- Our model suggests a slight uptick in oil prices based on its 93% correlation with trade growth, but no particular flight to safety in the form of greater gold trade.
- The UK’s exports outside of the EU27 are set to grow by over 1.3% during the course of 2020 and to slow to under 1% in 2021. This is significantly lower growth than for the top five trading nations, China, the US, Germany, Japan and South Korea.
- The pattern of faster export growth in 2020 than in 2021 suggests some return of investment following the tensions of 2019: a “truce dividend” from the Phase 1 deal between the US and China and the fact that Brexit is finally “done”. However, the momentum forecast that we use suggests that this uptick is short lived and that uncertainty has by no means diminished as a negative pull on global trade.