World export volumes have fallen by 3.3 per cent since the start of 2015, and Standard Life Investments (SLI) noted that this kind of sustained erosion is uncommon outside of a recession.
“The causes of this slump in global trade and production have been well documented. These include a collapse in global commodity prices and associated capex, weak growth across a number of large emerging markets, severe outbreaks of global financial stress and a sustained drag from inventories,” the company said.
Nevertheless, SLI said recent data suggests “that could be about to change”, with activity in Korea and Taiwan, both economies that can be used as “leading indicators for global activity”, experiencing improvements.
The company did however caution investors not to get swept up by the improvement in data, adding that growth is expected to remain weak and reliant on generous monetary policy support.
“While we may have passed the bottom in what has been a mini global trade and production cycle, there are lamentably few signs that the structural impediments to growth are being tackled,” it said.
“Until these are addressed across a range of markets it is hard to become too optimistic on the outlook over a longer time horizon.”
SLI pointed to Korea’s September trade data as evidence of this, with the figures showing a 5.9 per cent year-on-year drop despite industrial production and exports both improving.
This drop, the company argued, should serve as a reminder of “just how fragile any recovery remains”.
