World trade drops to lowest level in six years

ANKARA - Anadolu Agency

REUTERS photo

Global trade has contracted to the lowest levels seen since the 2008 financial crisis, according to a report released Aug. 26 by the World Trade Monitor.

Trade momentum was minus 0.5 percent in June, and minus 1.6 percent in May. Import momentum was negative or zero in all major regions.

Export momentum was positive in advanced economies, but negative in emerging economies, though rising fast from the previous month, the report said.

Momentum is the preferred index of trade levels, according to the research.

This puts global trade at the lowest levels seen in six years. “It’s a bloodbath,” commented the Center for Research on Globalization in a note published on Aug. 24.

The poor trade performance was confirmed by a plunge in the Baltic Dry Index, the benchmark for global freight carriage. The index dropped to 994 points in August, about 100 percent lower than its reading in May 2008.

The Bloomberg Commodity Index dropped to a 16-year low on Aug. 24, down 17.7 percent so far this year. Crude oil has seen an eight-week decline, the longest in 29 years. West Texas Intermediate dropped to below $40 per barrel on Aug. 21 for the first time since 2009.

Overcapacity in freight has pushed rates for carriage down almost 60 percent in three weeks, the center said. “It’s the worst drop in global trade since Lehman,” the note added, referring to the global financial rout that hit world markets after investment bank Lehman Brothers went bankrupt in 2008.