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A recovery in global trade over the summer is starting to falter, according to some warning signs pointing to the negative effects of widespread Covid-19 outbreaks in manufacturing centers in East Asia.
A dramatic drop in exports from Taiwan, which manufactures many computer chips used in cars and cellphones, has combined with temporary port closures and lockdowns in Australia, China and Japan to reduce the level of World trade.
Signs of a slowdown sparked a reaction this weekend from a key member of the Opec oil cartel, who said plans to expand oil production may have to be scrapped.
Kuwaiti Oil Minister Mohammad Abdulatif al-Fares said the 400,000 barrels per day increase in oil production agreed to by Opec and its allies, a group known as Opec +, during Previous meetings this year to meet growing demand could be revisited at its next gathering later this week.
The minister told Reuters that if the economies of East Asian countries and China continue to be affected by the Delta variant outbreaks, “caution should be exercised.”
The price of a barrel of Brent crude oil jumped 11% last week to $ 72.70 a barrel in response to concerns over supply cuts by OPEC and energy companies shutting down US production in the Gulf from Mexico as Hurricane Ida struck.
Edward Moya, senior market analyst at OANDA, said: “Energy traders are pushing crude prices up in anticipation of production disruptions in the Gulf of Mexico and in the face of rising expectations, Opec + could withstand increased production given the recent impact of the Delta variant on crude demand. “
Economists at Llewellyn Consulting said the outlook for Taiwanese export orders, three months ahead, fell from 70 percent year-on-year growth in 2020 to just 20 percent.
After an 18-month order book, lower export orders are expected to constrain the capacities of automakers and other manufacturers in the coming months. Some automakers have warned customers that they have to wait more than six months before certain models are back on sale.
“Global trade continues to be disrupted by port closures, most recently in Ningbo – China’s third largest port – which have also contributed to the huge increase in shipping container costs this year resulting from the blockage of many containers in places other than where they are needed, ”said the independent consulting firm.
“Another drag on global trade has been the continuing shortage of semiconductor chips, which are a critical input in automotive manufacturing today. Given Taiwan’s central role in the global semiconductor industry, the decline in its export orders since February points to a further slowdown in global trade growth.
Australia, which exports much of the world’s iron ore, is expected to narrowly avoid a second recession in two years when it releases national income (GDP) figures later this week. Some analysts expect the last quarter to show it only rose 0.1%, while others believe the country, where many cities and regions have entered further closures, could see its GDP reverse.
Recent surveys of businesses in the UK, Europe and the US have shown that rapid expansion in the developed world after the restrictions were lifted in the spring has started to falter.
U.S. central bank chief Jerome Powell said on Friday that the impact of the shortages on prices would likely be limited and not last beyond the end of the year.
However, some analysts have warned that low vaccination rates in some countries and the spread of the Delta variant will hamper export growth until 2022.
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