- 2021-05-10
Multi-country economic and trade frustration
Statistics released by the Ministry of Finance of Japan on January 23 show that due to high energy prices and the negative effects of trade frictions, Japan’s trade deficit in 2018 was 1.2 trillion yen (1 U.S. dollar equals 110 yen), the first since 2015. There was a full-year trade deficit.
Data shows that in 2018, Japan’s total exports were 81.49 trillion yen, a year-on-year increase of 4.1%, and two consecutive years of growth; driven by the expansion of crude oil and LNG imports, Japan’s total imports were 82.69 trillion yen, a year-on-year increase of 9.7%. Among them, the import volume of crude oil, liquefied natural gas and petroleum products increased by 24.5%, 20.8%, and 34.3% respectively.
Japan’s imports and exports fell short of market expectations. The Japanese government is optimistic that in 2019, the Japanese economy will be driven by domestic demand and continue to be on the path of recovery. The economic growth rate is expected to reach 1.3%. However, experts generally believe that the Japanese economy is still facing many risks this year. According to surveys by market institutions, the growth rate of the Japanese economy in 2019 may be only 0.7%.
Negative effects are widespread
Except for Japan, many export-dependent economies have performed poorly under the pressure of global trade frictions, and the economy is facing downside risks.
The latest economic data released by German officials showed that the German economy grew by 1.5% in 2018, which was a significant decline from the 2.2% growth rate in 2017. This is also the lowest annual growth rate since the European debt crisis. Analysts attribute the economic weakness to factors such as trade tensions.
Holgen Schmiding, chief economist at Berenberg Bank, said that the German economy has suffered "a series of shocks."
Some leading German companies have also been hit. Foreign media reports pointed out that Volkswagen and other automakers have been affected by weak sales in some overseas markets, and under the new EU emission test requirements, these companies can barely get approval for a few new models.
German economic growth was the most depressed in the second half of 2018, especially in the third quarter, when the economy shrank by 0.2%. According to the report, official data for the last three months of 2018 have not yet been released, but German statistical officials said that the German economy may have resumed growth in the fourth quarter, thus avoiding a recession.
But Schmiding believes that the economic slump may continue into 2019. According to the report, Berenberg Bank predicts that the German economy will grow by only 1.2% in 2019; economists at Capital International Macroeconomics Consulting Company forecast a lower growth rate of only 1%.
Schmiding said: "In the next few months, we will have to prepare for the extremely gloomy winter."
It is reported that the plight of Europe's largest economy will deepen concerns about the slowdown in global growth this year. Various risks will cast a shadow over the global outlook, including the impact of trade frictions and the sharp increase in US interest rates on emerging markets.
As one of the world’s major exporters of computer chips, ships, automobiles and petroleum products, South Korea experienced an unexpected decline in trade data in December last year. South Korea’s Ministry of Trade said that due to factors such as memory chips and falling oil prices, South Korea’s exports in December fell by 1.2% from the same month in 2017, while imports only increased by 0.9%.
The British "Financial Times" reported that South Korea's exports fell year-on-year, which is evidence that trade frictions affect regions and some economies.
According to recent data released by Singapore’s trade agency Enterprise Singapore, Singapore’s exports in December last year fell by 8.5% year-on-year due to the sharp decline in shipments of electronic products and medicines, which was much lower than the 1.5% increase expected in a Reuters survey, also since October 2016. The worst performance since exports fell 14% year-on-year.
The National Bureau of Statistics of Indonesia also stated that the country’s trade deficit in December 2018 was US$1.1 billion, and the deficit was greater than market expectations for the third consecutive month. This also brought the country’s trade deficit in 2018 to the highest level in history.
The International Monetary Fund stated that escalating trade tensions and deteriorating financial conditions are the main risks facing the global economy. Increased trade uncertainty will further damage investment and disrupt global supply chains.
Multiple measures to hedge downside risks
Affected by trade frictions and facing downward pressure, economies have introduced measures to prevent the economy from entering the downturn zone.
South Korea announced a series of stimulus measures, including tax cuts, in an attempt to minimize the negative impact of global trade frictions. Japan and other countries are stepping up to sign free trade agreements.
Since December 30 last year, Japan has reduced tariffs and relaxed quota restrictions on imported agricultural products from Canada, Australia, New Zealand, Chile and other countries. This is the new "Comprehensive and Progressive Agreement for Trans-Pacific Partnership" (CPTPP) signed by 11 countries. a part of.
The 11 countries that have signed the CPTPP are currently entering a new stage of upgrading cooperation. The first ministerial meeting since the agreement entered into force was held in Tokyo at the end of January. After the meeting, the parties issued a joint statement expressing their opposition to protectionism and support for free trade.
The meeting discussed and established specific negotiation procedures for countries or regions that intend to join, and issued a joint statement after the meeting, expressing concerns about the rise of global trade protectionism. The statement pointed out that in order to combat trade protectionism, free trade should be vigorously promoted and the scale of CPTPP should be expanded.
According to this agreement, the signatories will revoke or reduce tariffs on industrial products and agricultural products, and provide facilitation measures in the field of trade and investment. In addition, countries will also cooperate to reduce mobile phone international roaming tariffs, remove restrictions on cross-border data exchange, and jointly formulate laws and regulations prohibiting online transaction fraud.