Global Trade Needs Some Help as China Stumbles

Date: Monday, June 19, 2023
Source: Bloomberg

The underwhelming boost from China’s reopening has left the world’s trade engines sputtering and searching for new sources of growth.

Six of the 10 indicators on the Bloomberg Trade Tracker remained in below-normal range in mid-June, regressing to its prior level after a slight improvement in May. Trade flows are struggling to sustain a meaningful resurgence, despite headline numbers showing increased shipping volumes and muted input costs. A New York Federal Reserve supply chain pressure gauge recently clocked its most deflationary reading in 20 years of data.

Much of that is due to the somber global growth outlook, according to Bloomberg Economics Chief Economist Tom Orlik.

The US and Europe are facing higher interest rates and economic contraction, while hopes for a post-Covid China rebound have largely failed to materialize. Record debt, tepid demand and pessimism are damping industrial and consumer activity on the mainland, causing knock-on effects not just in Asia but beyond.

“If you put those pieces together, you’ve got weak growth in all of the major exporting and importing economies — of course that’s going to take a bunch of pressure off supply chains,” Orlik said.

We’ve selected measures across shipping, sentiment and export volumes to watch. For the clearest indication, we measured how far each gauge is from historic norms. These data update in real time from the Bloomberg Terminal as they’re reported.


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