Global trade to grow at its slowest pace in a decade; and no hope for sizable improvement

  • Global trade could grow at its slowest pace in a decade in 2019 (+1.5%).
  • There is no hope for sizable improvement in 2020 (+1.7%).
  • Amid rising protectionism, watch out for trade diversion and “phantom trade” in 2020.
  • Belgium in the top 10 exporting countries in 2020.

Brussels, November 21st, 2019International trade in goods and services entered a low growth cycle in 2019 (+1.5%). This is the conclusion of the latest ‘Euler Hermes Global Trade Report’ published by Euler Hermes. In this study, the world leader in Trade Credit Insurance reports on the consequences of the U.Ss-China trade tensions and gives its forecasts for 2020.

According to Euler Hermes, global trade is expected to grow by only +1.5% in volume this year (compared to +3.8% in 2018). This is obviously due to the U.S.-China trade tensions that have plunged the international economy into uncertainty, and thus led to a deceleration in global demand, but also to specific shocks in the automotive and electronics sectors. As a direct result, exporters are likely to see USD 420 billion in losses this year.

Belgium in the top 10 exporting countries in 2020

The slowdown in the growth of international trade has inevitably left its mark on the most open and trade-exposed economies. This is particularly the case for Germany, whose economic growth is expected to be limited to +0.6% in 2019. In Belgium, export volume growth will also remain weak in 2019 (+1.3%) given the German and European slowdowns.

On the other hand, Belgium is benefiting slightly from the U.S.-China trade dispute, thus offsetting the decline in exports to Italy, the United Kingdom, China, Turkey, Russia and Poland. Belgian exports to the United States have risen sharply (+23% since the beginning of 2019 against 10% for the same period in 2018). In total, Belgian exports are expected to grow by +2 billion EUR in 2019.

In addition, preparations for a possible hard Brexit helped Belgian exporters to export more during the summer (+0.3 billion EUR) after a drop of -0.6 billion EUR in the first half of 2019. With a total of 18 billion EUR in export earnings, Belgium will be in the top 10 exporting countries in the world in 2020.

In 2020, no significant acceleration in world trade to be expected

The year 2020 should not be any more promising for international trade in goods and services, which is expected to grow by only +1.7% in volume according to Euler Hermes. A low growth cycle begins.

"We expect trade uncertainty to persist in 2020. Faced with this situation, economic actors should again be cautious next year: we believe that international demand and investment will not accelerate, and that global economic growth will slow further (+2.4%). This is another year of slow growth in international trade," says Alexis Garatti, Director of Macroeconomic Research at Euler Hermes.

Trade diversion and phantom trade

When faced with escalating U.S.-China trade tensions, small and agile exporters benefited the most from trade diversion. In other words, the largest trade partners are losing market share or gaining less than average (Canada, Germany, Japan and Mexico), while many of the smallest trade partners (Taiwan, the Netherlands and France) are rapidly gaining.

Phantom trade is the other consequence of escalating U.S.-China trade tensions: Some Chinese companies could be shipping their merchandise to third markets, such as Taiwan and Japan, just to then ship the goods to the U.S., avoiding tariffs.


Read the Euler Hermes’ full Global Trade Report 2019 here.

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