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World trade bounce back in third quarter - ING

FXStreet (Delhi) – Raoul Leering, Head of International Trade Research at ING, suggests that the world trade volume figures for Q3 confirm that trade is cautiously recovering.

Key Quotes

“World trade expanded by 1.1% in Q3, after a decline of 1% in Q2, according to data from The Netherlands Bureau for Policy Analysis (CPB). The simultaneously released MoM growth figure shows the first positive figure since June (+0.5%). We forecast a further recovery of world trade in Q4 and growth of 3.4% for 2016, 20% higher than our 2016 forecast for world GDP growth (2.8%).”

“A look at the monthly data shows that the Q3 recovery leans partly on a carryover effect from Q2. In June world trade growth, measured by the sum of goods imports and exports, grew strongly with 2.9%. After June trade volumes have held up quite well, showing only small declines in July and August and a small increase in September. The holding off of a hard landing of the Chinese economy in Q3 has supported Chinese import demand. Recent declines of Chinese imports and exports are nominal figures which are pushed down by another bout of price declines of commodity prices.”

“Looking forward we forecast a continuing recovery of world trade for this quarter and the first quarter of 2016. Trade will benefit from the expansionary policies in China that will push up industrial production growth from the current 5.5- 6% to 7- 8%.”

“For the Eurozone ING expects moderate acceleration of industrial growth from 1.5% in Q3 to 2- 2.5% in Q4 and Q1 2016. This is good news for world trade since trade in goods is closely related to industrial production.”

“Moreover, in 2016 Brazil and Russia will not be such a big drag on world trade as this year because their economies will shrink less next year, meaning less decline of their import demand. This matters because their recessions have been responsible for about a third of the bad performance of world trade this year.”

“On the other hand developments in the US and Japan, number one and four importers in the world respectively, put a hold on the strength of the recovery in world trade. ING foresees a slowdown of investments and a continuation of weak performance of industry in the US with industrial growth in the next two quarters at best 1% but probably closer to 0%.”

“In Japan private investment growth will return to positive numbers in Q4 but not higher than 1.6% and will stay around this moderate level in Q1 2016. ING forecasts a growth rate of world trade of 3.4% for 2016, 20% higher than the growth of world GDP in 2016.”

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