World trade fell by 1.3% in August 2018 as trade disputes between the US and China began to hurt the global economy.
The finding, revealed in the monthly Global Kuewhne + Nagel Indicators’ (gKNi) World Trade Indicator, is despite a strong July for the market, in which trade remained steady despite threats of tariffs between the two biggest economies.
However, the World Trade Indicator suggests investors are becoming cautious as pressures on global agreements and institutions are beginning to leave their mark.
The gKNi expects the global slowdown to continue into September 2018, with emerging economies suffering the most, with some countries in Asia seeing double digit year-on-year (YoY) drops.
Exports from Japan, South Korea and India are forecast to fall into negative territory, declining by 10.2%, 11.8% and 9.8% respectively. Losses are also expected in Taiwan (8%) and Brazil (4.8%).
China saw its YoY export growth fall by 12.2% in July to 7% in August, a trend that is expected to continue into September as its trade war with the US begins to affect its manufacturing and the value of its currency, the yuan.
The US Trade Representative (USTR) is currently consulting on the proposed $200 billion worth of tariffs on China, due to come into effect on September 6 2018.
According to gKNi, the current world trade figures are consistent with manufacturing output forecast, with September 2018 expected to see lowest monthly growth since July 2015.
In its report, the gKNi said: “After a strong gauge in July, the new data show a negative trend. The sharpest slowdown is expected for emerging markets, which are most exposed to any impact from rising trade tensions.
“In September, a major setback in exports is expected in South Korea, Japan, Taiwan, India, and Brazil”.