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Standard Bank Group
The SA Daily 19 November 2019

Easing, to balance tough trade

  • World merchandise export volumes grew at just 0.2% y/y in Q2:19, after 1.2% y/y in Q1:19 and 3.4% y/y in Q2:18; these volumes are now below their historical Q1:96-Q2:19 average of 3.2% y/y as well as below the 4.2% y/y average of Q1:10-Q2:19. The World Trade Organisation latest goods trade barometer implies that “goods trade will likely remain below trend in the third quarter and into the fourth quarter”.
  • In December 2017, world merchandise export volumes growth recorded 5.6% y/y and has since slowed to the recent mere 0.2% y/y in 2Q19 in the wake of the US-China trade war.
  • As a result of the ongoing trade tussle, global growth has been edging down and EM and commodity currencies have weakened. In response, global central banks have eased monetary policy to cushion their economies.
  • The rand, as commodity currency, too has weakened, and the SARB too has eased monetary policy — by 25 bps in July, and we expect another 25 bps cut this week.

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