€¦ · China growth cut by - 0.3pp, CNY depreciation similar to 2015 ( - 10%) Negligible on...
Transcript of €¦ · China growth cut by - 0.3pp, CNY depreciation similar to 2015 ( - 10%) Negligible on...
04 Global trade outlook in 2020: The force weakens
06 Revenge of the trade Sith
08 Will the U.S.-China empires strike back in 2020?
10 The phantom trade menace
13 The return of trade Jedis
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Georges Dib, Economist for Latin America, Spain and Portugal
+33 (0) 1 84 11 3383
Corentin Jousserand, Economic Research Assistant +33 (0) 184 11 5112
Ludovic Subran, Chief Economist at Allianz and
Euler Hermes
+33 (0) 184 11 5399
Emily Chiang, Economic Research Assistant +33 (0) 184 11 4708
With the kind contributions of the whole Euler Hermes and Allianz Research teams
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Sources: IHS Markit, Euler Hermes, Allianz Research
3.3% 4.0%3.0% 2.5%
5.5% 3.6% 1.5% 1.7%2.8%
2.0%
-10.3%
-1.7%
9.9%
9.0%
-1.7%
2.3%
-15%
-10%
-5%
0%
5%
10%
15%
13 14 15 16 17 18e 19f 20f
Volume Price Value
Sources: IHS markit, CPB, Euler Hermes, Allianz Research
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Sources: IHS Markit, Bloomberg, Euler Hermes, Allianz Research
-25
-20
-15
-10
-5
0
5
10
15
20
07 09 11 13 15 17 19
44
45
46
47
48
49
50
51
52
53
54
EH TMI (right scale)
Volume global Merchandise (goods) trade
growth y/y (CPB, left)
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
15 16 17 18 19
7 Bellwether value (own estimate)
World Trade CPB in value
Commodity prices (CRB-BLS)
“The so-called
“phase 1” deal be-
tween the U.S. and
China, despite being
superficial, may
bring some comfort.
But renewed threats
of tariffs and a busy
political year in 2020
should bring higher
volatility, leaving no
hope for sizable im-
provement going
forward.”
Ludovic Subran, Chief Economist at
Allianz and Euler Hermes
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Sources: IHS Markit, Euler Hermes
Sources: IHS Markit, Euler Hermes
9087
35252120
1817
1615
141110101010
109
97
76
665
-80 -30 20 70 120
China
Canada
Netherlands
Germany
Belgium
United Arab Emirates
Spain
Italy
Egypt
Japan
Australia
Ukraine
Israel
2019
2020
-47
-42
-27
-24
-13
-2
0
2
6
10
11
20
22
36
37
41
62
-300 -200 -100 0 100 200 300 400 500
Electronics
Metals
Machinery&Equipment
Energy
Computers&Telecom
Automotive manufacturers
Household Equipment
Automotive suppliers
Paper
Transport Equipment
Construction
Transport Services
Textiles
Pharmaceuticals
Chemicals
Agrifood
Software & IT Serv ices
2018
2019
2020
The damaged eight
The resilient nine
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Source: Euler Hermes, Allianz Research
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1
Trade feud
(55%)
Trade war
(10%)
Global trade slows down (-2pp) US growth cut by -0.5pp US inflation durably up by +0.1 pp Europe growth cut by -0.6pp China growth cut by -0.3pp, CNY depreciation similar to 2015 (-10%)
Negligible on global trade US real GDP growth cut by -0.1pp; negligible impact on US inflation Europe’s ongoing recovery not impacted China remains on soft landing trajectory
Global trade contracts (-6pp) US growth cut by -1.7pp US inflation durably up by +0.4pp Europe growth cut by -1.9pp China growth cut by -1pp only on the back of stabilizing policies;
CNY depreciation (-20%) EM broad recession
Trade game(35%)
3.5%
4.0%
6.0%
12%
Milestone
Chinese imported products: USD50bn at 25% tariffs
& 25% import tariffs on steel imports
& 10% import tariffs on aluminum imports
Milestone
Chinese imported products:
USD50bn at 25% tariffs &
USD200bn at 10% tariffs
or
Chinese imported products: USD
50bn at 25% tariffs
&
US automotive imports:
USD200bn at 25% tariffs
Milestone
2 out of 3 events to trigger trade
war:
25% tariffs on cars imported in the
US (USD200bn)
25% tariffs on remainder of US
imports from China
Mexico tariffs progressively hiked to
25% on all imports (USD370bn)
Two-year cumulated end-of-period impactGlobal trade growth
4.0%
2.0%
0.0%
We
are
here
at end
Nov
We
are
here
at end
Nov
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Source:s: ITC, WTO, Euler Hermes, Allianz Research
-4.0
-1.8-0.8 -0.4 -0.2 -0.2 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 0.0
-8.5
-3.8
-1.6-0.9 -0.5 -0.4 -0.3 -0.2 -0.2 -0.2 -0.1 -0.1 -0.1
-14
-12
-10
-8
-6
-4
-2
0
EU
Ger
man
y
Uni
ted
King
dom
Ital
y
Slo
vakia
Swe
den
Fin
land
Aus
tria
Spa
in
Hun
gary
Bel
gium
Net
herla
nds
Fra
nce
Additional losses if tariffs are hiked to 25%
Export losses i tariffs are hiked to 10%
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The size of the bubble is the country’s total exports in 2018 in USD Sources: ITC, IHS Markit, Euler Hermes
South Korea
Taiwan
Japan
Australia
Germany
Brazil
Malaysia
Russian Federation
Saudi Arabia
Viet Nam
France
CanadaIndonesia
Singapore
Switzerland
United Kingdom
United States of America
-30%
-20%
-10%
0%
10%
20%
30%
0% 2% 4% 6% 8% 10% 12%
Chan
ge in
mar
ket
shar
e in
Chi
na's
impo
rts b
etw
een
2019
and
201
8
2018 market share in total China. imports
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The size of the bubble is the country’s total exports in 2018 in USD Sources: ITC, IHS Markit, Euler Hermes
Sources: ITC, Euler Hermes
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China
Mexico
Canada
Japan
Germany
South KoreaIndia
Italy
Taiwan
France
Malaysia
Thailand BrazilSingapore
Netherlands
Israel
-26%
-16%
-6%
4%
14%
24%
34%
-5% 0% 5% 10% 15% 20% 25%
Chan
ge in
mar
ket
shar
e in
U.S
. im
ports
bet
wee
n 20
19 a
nd 2
018
2018 market share in total U.S. imports
90
95
100
105
110
115
120
125
130
Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19
Exports from Japan to the U.S.
Imports of Japan from China
Imports of U.S. from China
Implementation of List 3
tariffs by the U.S.
Georges Dib, Economist for
Latin America, Spain and Portugal
”“Phantom trade avoids tariffs and artificially
inflates trade figures. Our preliminary analysis
with not more than a year and a half of data
shows that Japan and Taiwan are used as re-
bound markets for machinery products”
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Figure 11 Regional trade agreements entering into force
Sources: WTO, Euler Hermes
0
50
100
150
200
250
300
350
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Number of Regional Trade Agreements (RTAs) currently in force, by
year of entry into force (rhs)
Yearly growth of RTAs (lhs)
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Sources: IHS, Bloomberg, WTO, GTA, Euler Hermes, Allianz Research
Sources: IHS, Bloomberg, WTO, Euler Hermes
CountryTrade openness (%
GDP)
Total # of
protectionist measures
since 2008
Average tariffGoods trade
balance % GDP
Trade deficit
concentration
index
REER change
since 12/2017
Argentina 38% 319 14% 0% 67% -33%
Australia 44% 174 3% 1% 50% -7%
Brazil 24% 302 13% 1% 61% -10%
Canada 67% 199 4% 0% 52% -1%
China 53% 256 10% 32% 40% -1%
France 59% 262 5% -2% 61% -1%
Germany 113% 390 5% 4% 82% -1%
India 63% 566 17% 0% 50% -3%
Indonesia 45% 219 8% 0% 75% 2%
Italy 59% 294 5% 1% 61% -2%
Japan 40% 209 4% 0% 55% 8%
Mexico 64% 103 7% 1% 56% 3%
Russia 43% 423 7% 4% 61% -1%
Saudi Arabia 73% 44 5% 6% 60% 4%
South Africa 59% 129 8% 0% 59% -2%
South Korea 139% 75 14% 0% 46% -6%
Turkey 49% 167 11% -2% 51% -9%
UK 49% 357 5% -7% 43% -2%
US 46% 790 3% -3% 57% 6%
Trade capability Trade irritability
China
Germany
Canada
Brazil
India
France
Indonesia
Italy
Japan
Mexico
Russia
Saudi Arabia
Turkey
US
South Korea
AustraliaSouth Africa
UK
0
100
200
300
400
500
600
700
800
900
-15% -10% -5% 0% 5% 10%
Tota
l pro
tect
ioni
st m
easu
res
Change in REER in 2019
Irritable and equipped
Equipped but not irritable
Not equipped and not irritable
Irritable but not equipped
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Impacts of the shift to a more sustainable model of trade on trade flows and companies
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Sources: WTO, IMO, Maersk, CMA CGM, EU Commission,, the OECD