The CPB Netherlands Bureau for Economic Policy Analysis released its monthly report this week on world trade and world industrial production for the month of May. Here are some of the highlights:
1. World trade volume increased by 2.3% in May from the previous month, following a decrease of 2.2% in April. Imports of all major regions and countries increased strongly. However, exports of the emerging countries declined further with the exception of Latin-America. Exports of the advanced economies recovered to the highest level since the outbreak of the financial crisis, but are still 4% down on the pre-crisis peak.
2. On an annual basis, world trade volume was above its year-ago level by 7.14%.
3. World industrial production recovered as well in May by 0.8% from the previous month, following a slightly revised 0.2% decline in April. Half of the rise was due to the ongoing recovery in Japan, with a mixed picture for the other major countries and regions.
4. Compared to May of last year, world industrial output gained almost 5% (4.76%), and is almost 6% (5.94%) above the pre-recession level in December 2007.
Bottom Line: We still face many economic uncertainties (and they sure spooked the market today), but the upward trends in both world trade and output through May to levels above their pre-recession levels suggests a worldwide economic recovery from the dreadful economic conditions of 2008 and 2009. If the upward trends in trade and output continue, we can look forward to a gradually improving world economy. But if the economic headwinds continue to accumulate, we could be looking at a slowdown in Q3 and Q4.