Both monetary and fiscal authorities, all around the world expressed concerns over and over again about the “Great Moderation”, post financial crisis of 2008/09, where exceptionally loose and experimental monetary policies have been used but still the growth remained subdued. Latest global trade report from CPB Netherlands Bureau of Economic Analysis shows that this trend is either likely to continue or may even falter for the worse.

• Global trade volume shrunk in the month of May by 0.4 percent on a monthly basis that came after a decline of 0.3 percent in April. What more concerning is the fact that since 2012 (last 3 months on a year ago), global trade volume growth remained around 2 percent. While it reached as high as 4 percent in early 2015, it has declined steadily since to drop to negative in 2016. See Chart 1
   
• Though CPB’s Merchandise trade volume index is much higher than the pre-crisis level, it has been showing signs of erosion. See Chart 2

In terms of value, the drop has been much sharper. After declining by 1 percent in 2013, and 1.8 percent in 2014, it has declined by 13.4 percent in 2015. In the first quarter of 2016, world trade has declined by 3 percent.

Many factors had contributed to this additional downfall in past two years, namely, a sharp drop in commodities price leading to a belt-tightening by the producing countries, drop in the exchange rate of emerging economies which again led to cut in imports, and subdued recovery in the U.S., Japan, and Europe.

Uncertainties surrounding the Brexit and the fear of hard landing likely to keep on weighing over the global trade and growth.