Kiel Trade Indicator 01/22: Despite omicron and supply bottlenecks—world trade exceeds pre-crisis level
Despite ongoing congestions in container shipping, global trade is up in January compared with the previous month and has now even surpassed its pre-crisis level (price and seasonally adjusted). This follows from the latest data update of the Kiel Trade Indicator. In terms of trade in goods, the Omicron wave has so far primarily posed a threat to the Chinese economy. Currently, around 11 percent of all goods shipped worldwide are stuck in traffic jams, and around 11 percent fewer goods than usual are being moved in the Red Sea.
The Omicron wave has so far been limiting China’s trade figures in particular, and the upward trend from 2021 has been broken. Compared with the previous month, the Kiel Trade Indicator for January shows a drop in both imports (-2.8 percent) and exports (-0.2 percent) (price and seasonally adjusted).
”Beijing’s tough zero-Covid policy is a threat to the economy there. There is great risk that this will also affect Europe’s trade through further delays in port operations,” said Vincent Stamer, head of Kiel Trade Indicator. ”However, the Chinese New Year and especially the hosting of the Olympic Games are a test for the Chinese economy that the pandemic and therefore also the economic situation does not worsen.”
Trade in the West has so far been spared by the Omicron wave. US exports in particular are up significantly in January (+3.6 percent), but imports are expected to fall slightly (-1.6 percent).
For the EU, a sideways movement is emerging in January trade, with a slight increase in exports (+0.6 percent) and a slight decrease in imports (-0.1 percent).
For Germany, the outlook is positive for both exports (+1.2 percent) and imports (+0.8 percent).
Global trade is expected to increase by 2.4 percent, driven mainly by positive trade figures from the West, especially strong exports from the USA. It is now 7 percent above its previous peak before the Corona crisis in August 2018 (price and seasonally adjusted).
”Despite the Omicron wave, global trade is running more strongly than ever before. The continuing supply bottlenecks are therefore a result of an extremely fast increase in demand that supply cannot keep up with,” says Stamer.
Around 11 percent of all goods shipped worldwide are currently stuck in traffic jams. In the Red Sea, the most important trade route between Europe and Asia, around 11 percent fewer goods are currently being moved than usual.
The next Kiel Trade Indicator updates will be on February 21 (without media information) and March 7 (with media information for Feb 2022 trade data).
For more information on the Kiel Trade Indicator and forecasts for 75 countries, visit www.ifw-kiel.de/tradeindicator.
About the Kiel Trade Indicator
The Kiel Trade Indicator estimates trade flows (imports and exports) of 75 countries worldwide, the EU, and world trade as a whole. Specifically, the estimates cover over 50 individual countries as well as regions such as the EU, sub-Saharan Africa, North Africa, the Middle East, or emerging Asia. It is based on the evaluation of ship movement data in real time. An algorithm programmed at the Kiel Institute uses artificial intelligence to analyze the data and translates the ship movements into seasonally adjusted growth figures compared with the previous month.
We update the data twice a month. Around the 20th (without media release) for the current and the following month and around the 5th (including media release) for the previous and the current month.
Arriving and departing ships are recorded for 500 ports worldwide. In addition, ship movements in 100 maritime regions are analyzed and the effective utilization of container ships is derived from draught information. Country-port correlations can be used to generate forecasts, even for countries without their own deep-sea ports.
Compared to other leading trade indicators, the Kiel Trade Indicator is available much earlier, is much more comprehensive, relies on a uniquely large database using big data, and has a low statistical error by comparison. The algorithm of the Kiel Trade Indicator uses machine learning, so that the quality of the forecast continues to improve over time.
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