StanChart report points to rocky road for global trade

A new report released by Standard Chartered has indicated the increasing possibility of an uneven recovery path in global trade.

The report, published in early May 2010 and taken from data compiled between January 2008 and February 2010, found that China’s trade trends are easing the procedure of the global economic recovery; with the country continuing to record a depreciating trend in its trade surplus.

February 2010 is cited by the report as a particularly significant month for China as the country’s trade surplus almost halved from US$14.2bn to US$7.6bn.

However, the report stresses that the slump in trade values in February can be attributed to the historical seasonal decline in demand thanks to Christmas and Lunar New Year celebrations.

The report found that commodity prices have held fairly well, despite Greece’s debt concerns creating a stronger US dollar, with oil sticking to between US$80-85 per barrel for the majority of the year.

India has also recorded strong trade activity, with the country’s exports rising an annual 34.8% in February 2010 to US$16.09bn, the fourth consecutive rise after 13 successive months of decline.

Imports in India also rose sharply to US$25.06bn, up 66.4%, contributing to India’s trade deficit of US$8.97bn by February 2010.
Singapore and South Korea both stuck to the trend and showed measured signs of growth.

Singapore’s non-oil domestic exports rose by 15% during the course of the survey, thanks to an expansion of pharmaceutical, electronics and petrochemical exports.

Following a temporary deficit of US$500mn in January 2010, Korea returned to a trade surplus of US$2.3bn in the following month with imports only declining slightly from US$31.5bn in January to US$30.9bn in February, which Standard Chartered says points to a continued gradual import recovery amid stable commodity prices.

However, the trade surplus may not be supportive of the Korean won if export growth continues to be sluggish, declining slightly from US$29.1bn to US$28.3bn.

“The availability of trade finance as a lubricant to global trade cannot be overemphasised, A recent survey conducted by the International Chamber of Commerce points to a constrained supply of trade finance by financial institutions globally. Addressing this challenge is critical to ensuring an uninhibited path to global trade recovery,” adds the report.