World trade: an analysis by industry

In the trade slowdown phase of the first half of 2019, investment and electronic goods slowed down the most

Published by Luigi Bidoia. Aug. 7, 2019 .

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In the first half of 2019, world trade measured at constant prices (thus, without taking into account price changes) registered a substantial stability with respect to the same period of 2018 (see Has the Global Economic Slowdown Stopped?).
To further investigate the reasons behind this slowdown, this article analyzes the recent dynamics of world trade for each Ulisse industry.
In the figure below each industry is positioned on the basis of the year-over-year growth rate of the world trade in 2018 (x axis) and in the first half of 2019 (y axis). The bisector helps to show the industries that slowed down the most in 2019 (located in the bottom right corner). The size of each ‘ball’ is proportional to the value of the international trade in 2018. The color of the ‘ball’ splits industries on the basis of what they produce - Raw materials, Intermediate goods, Consumer goods and Investment goods. Positioning the mouse over each ‘ball’, it is possible to visualize a table with data about the growth rates and the value of international trade in 2018.

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The analysis of this Figure allows to individuate six Clusters:

Investments goods (excluding Means of transport)

The green circles in the bottom right corner of the Figure compose this cluster. These are the industries that slowed down the most, confirming a generalized deceleration of international trade and a climate of uncertainty, consequence of the trade war led by the Trump administration.

Means of trasnport (F3)

On the left of the Figure the Means of transport industry slowed down during the 2018, too. The reason behind this downturn is the swift in the demand of customers after the dieselgate and the necessary time for manufacturers to switch the production in favor of electric vehicles.

Consumer Goods (excluding Health products)

This cluster is characterized by the grey circles. Its slowdown is moderate (e.g. E2: Fashion products) or absent. Agrifood industry (B1 and E0) registered a slight acceleration. The performance of this cluster shows that the Consumer goods have not been involved in the global economic slowdown.

Health products (E4)

World trade of Health products stays in “positive territory”, but showed a strong slowdown in H1-2019 compared to the 2018 performance. This reflects the climate of uncertainty that led companies to a reduction in purchases along the whole supply chain. However, the growth in H1-2019 is high (nearly 4%), confirming the increasing trend in the demand of “health”.

Raw materials

The two industries composing this cluster (A1: Natural raw materials, and A2:Industrial raw materials) accused a significant slowdown in 2019. Considering the size of the world trade of Raw materials, the slowing down of the trade flows of these two industries heavily affected the whole international trade.

Electronic goods

This cluster is composed by final goods (F1) and components (D1), positioned in the bottom right corner. These industries accused a strong decline mainly due to the tariffs imposed on American imports of Chinese goods. In particular, in H1-2019, US imports of some Chinese products declined between 20 and 50 percent.

Conclusions

The analysis of the world trade for industry confirmed the current slowdown phase, attributable to two elements:

strong change in preferences of consumers towards less pollutants vehicles, which led to a slowdown of the entire Automotive supply chain;
the trade war led by the Trump administration, which effected directly electronic goods, and indirectly the entire economy (especially Investment goods and Raw materials) by promoting a climate of uncertainty.