US-China trade deal may be close, but global trade recovery likely to lag behind, TS Lombard says
- Research firm TS Lombard foresees a ‘sharp downturn’ in Chinese export growth in April
- ‘Downside risks’ to global trade remain
Global trade could remain subdued even if the US and China reach a deal to end their trade war later this month, according to the research firm TS Lombard.
In its latest report on emerging markets, the firm said it expects a decline in emerging markets export growth to get even steeper in April despite a strong recovery in Chinese exports in March.
“The model suggests that there will be a sharp downturn in China’s export growth in April followed by a smaller decline in May, while exports may contract at a slower pace in June,” Jon Harrison, managing director for emerging markets macro strategy at TS Lombard, said in the report. “A US-China trade deal appears likely in the coming month, but there will continue to be a lagged impact on world trade.”
After a double-digit drop in February, Chinese exports grew at 14.2 per cent in March, well ahead of forecasts, according to the General Administration of Customs. Imports, however, continued to shrink, following declines in January and February.
The timing of the Lunar New Year holiday in 2018 meant that exports were slower to recover in the prior year, leading to a more favourable comparison.
The US has placed tariffs on nearly half of all goods imported from China as the Trump administration seeks to force Beijing to change years of what it says are unfair trade practices and overcome a trade deficit that soared to US$419.2 billion last year.