11.02.201914:04 Forex Analysis & Reviews: Global trade on the verge of recession

Currently, a number of experts pay attention to signs of a slowdown in the global economy. Most signals indicate that it is approaching a recession. This is confirmed by the large-scale decline in global trade over the past three years.

For ten years, most of the negative economic news was perceived by financial markets with optimism since the economic downturn means a soft central bank policy. During this period, the company showed good financial results but now the situation has changed. Experts record the fall in revenue for the first time since 2016. Analysts do not exclude that in the first quarter of 2019 and it is expected to decrease in earnings per share in annual terms.

Experts urge to pay attention to weak macroeconomic data from Europe. Eurozone's first economy, Germany, is on the verge of a recession. The investment attractiveness of the country is in connection with this fall. At the moment, the yield on German 10-year bonds has decreased to 0.08%, although, a year ago the figure was 0.77%.

Serious concerns of investors are caused not only by the eurozone economy but also the entire global economy. The fall in investment activity is recorded against the background of alarming reports about the US-China trade negotiations. According to analysts, the trade war between both countries is not only in the information space but also has a negative effect on the global economy. At the same time, the Chinese economy is showing signs of a slowdown and a further decline. Recall that Germany and all eurozone countries are the leading trading partners of China, hence, economic conflicts strike Europe. In the industrial production of the Federal Republic of Germany, the fourth month in a row has been falling and its dynamics have deteriorated significantly.

One of the key indicators of the global trade state is the Baltic Dry Index bulk freight index. At the moment, its dynamics indicate a collapse of world trade. The Baltic Dry Index is at its lowest level in the last three years. It was 44% lower than last year, experts emphasized.

The volume of global trade in the period from September to November 2018 showed the strongest decline, which was not the case since the mid-2015. As a result, most states began to lower forecasts for the growth rates of their economies. EU countries have reduced their forecast for GDP growth to 1.3% from the previous 1.9% in 2019. Experts of the UK central bank lowered the growth of the economy from the previous 1.7% to 1.2%, while the Bank of Australia reduced its GDP forecast to 2.75%. Analysts considered the fears of the Australian regulator to be unnecessary, as there has never been a recession on the Green Continent, at least since the creation of the World Wide Web.