Qatar National Bank (QNB) witnessed a significant decline in global trade volumes in the coming months, attributing this to the decline in the transportation sector and the indicators of important countries, as well as the continuous rise of the dollar.
The Qatari bank said in a report, today, Saturday, that trade data are among the few indicators that express well the soundness of the general conditions of the global economy.
"This data, backed by real cross-border transactions, monitors demand for key products and factors of production, including physical consumer goods, capital goods, inputs and basic commodities," he added.
As a result, global trade data is usually highly sensitive to macroeconomic conditions, and changes with cycles of economic expansion and contraction, according to the bank.
The bank pointed out that data related to the volume of global trade provides a picture of the recent past, not the present or the future.
For example, data from the Dutch Central Planning Office for Economic Policy Analysis is released with a delay of three months, which means that the latest version of it reflects trade volumes during August 2022.
The bank said: "It is better to look at alternative data sources that provide future insights, rather than looking at past data."
He explained that the main indicators of global trade "will not continue to grow", and that "they will witness a slowdown that may reach deflation in the coming months."
The bank attributed these expectations to the frequency data coming from the United States, Europe and Japan, which indicate a stagnation in global trade, according to data last October.
The report said that higher inflation negatively affects disposable income in major economies, reducing aggregate demand.
"This is consistent with the continued slowdown in trade growth in early reporting Asian exporting economies (Japan, South Korea, Singapore and Taiwan)," he added.
The report pointed out that these countries in particular usually lead global trade trends, as they play a major role in the supply chains of industrial activities across different continents.
The bank also attributed its expectations of a decline to the fact that investors expect a decline in the transport sector during the coming period, which is a major indicator of the global trade movement.
The bank said that foreign exchange movements will also play a role in thwarting global trade, noting that the rise in the value of the US dollar, which is expected due to the strength of interest rate hikes and the outperformance of the US economy, is a major obstacle to the growth of global trade.
According to the report, about 40% of global trade flows are conducted in US dollars, and a stronger US dollar makes non-US imports more expensive.
The bank concluded that this leads to more pressure on disposable income or even supports the substitution of imports with local products, which negatively affects trade volumes.
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