Today the evolution of inventories in the US relative to China, a good advanced indicator of a deterioration in global trade growth, reached a historically high level of 4.5 as per our proprietary indicator. If China and the US fail to find an agreement in Q2, uncertainty would remain and both global trade and global economic growth could slow further. For each two months of trade uncertainty, we estimate the cost to be -0.1pp of global trade growth, and for each four months, -0.1pp of global economic growth.

Provided that there is an agreement between the US and China in Q2 2019, we expect global trade growth to slow to +3% in 2019, and +2.7% in 2020 as global economic growth decelerates and corporates have little pricing power.