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India the Sole Growth Spot on DHL’s Global Trade Barometer

World trade is expected to continue to contract in the next three months, according to the DHL Global Trade Barometer (GTB), brought down in great part by the ongoing U.S.-China trade war.

The GTB’s overall trade outlook was reduced by 2 points to a new index value of 45. That means that global trade continues to lose momentum moderately, a new report from the ground and air carrier said.

With the exception of India, all surveyed countries show the negative impact of the global deceleration and recorded indexes below the 50-points threshold of no growth. The overall decline was driven by minor decreases in both air and containerized ocean trade. Air trade declined 3 points to 42 points, and containerized ocean trade by 2 points to 46 index points.

“According to the DHL Global Trade Barometer, the year will probably end with moderate world trade (levels),” Tim Scharwath, CEO of DHL Global Forwarding, Freight, said. “However, we’ve to bear in mind where we come from–the rapid growth world trade has undergone in recent years was like climbing the Mount Everest. Now, we are on the descent, but we are still breathing altitude air.”

Out of seven surveyed countries, six posted mildly negative trade outlooks. Germany and China both fell 3 points to an index of 45 and 42, respectively. Germany’s decline was mainly triggered by a weakening air trade outlook, which fell 7 points to 45. The slowdown in Chinese trade was driven by sluggish air and ocean trade, leaving China with the weakest growth outlook of all surveyed countries.

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DHL said this downturn can be attributed to the ongoing trade war between the U.S. and China. U.S. trade is also expected to contract, dipping 1 point to 44 index points.

The overall outlook for South Korea is a decrease of 2 points to a new index value of 43 points.

“The world economy is entering a phase of stagnation, reflecting weak and slowing growth in some major economies and essentially no growth or mild contraction in others,” Eswar S. Prasad, professor of trade policy and economics at Cornell University in Ithaca, N.Y, said in the report.

“Persistent trade tensions, elevated political instability and geopolitical risks, and concerns about the limited efficacy of monetary stimulus continue to erode business and consumer sentiment, with detrimental effects on investment and productivity growth,” Prasad added. “Growth in household consumption, which has underpinned recent economic performance, has stayed strong but is weakening in major advanced and emerging market economies.

Prasad said the latest DHL GTB update shows that international trade flows have been adversely impacted by these factors. The declining indexes for China and the U.S., the two main drivers of global growth, “portend a worsening global economic outlook,” he said. “Overall, this GTB update paints a sobering picture of gloomy prospects for the world economy and global trade for the remainder of this year.”

India was the only country that managed to return to a moderate growth outlook, picking up 5 points to 54, boosted by strong ocean trade. In contrast to continuously weak air trade that was down 4 points to 44, Indian ocean trade increased 10 points to an index of 60.

While Japan and the U.K. had been the only countries with positive trade outlooks in the previous update in September, the two countries recorded the highest losses in this period, each falling below the 50-point threshold.

The forecast for Japan fell 5 points to 48, mainly due to weakening prospects for Japanese air trade.

U.K. trade had already seen a downward tendency in the previous update. Dropping 4 points to a new index value of 49, the GTB indicates a mild decrease for U.K. trade. The decline was driven by slight dips in air and ocean trade.

“After several quarters of relative resilience, this development obviously reflects the persisting Brexit uncertainty,” DHL added.