Not the New Year markets we were expecting

As many readers will no doubt remember, the first quarter of this year was supposed (as is now customary) to have been the period in which the “global economic recovery” became entrenched.

Unfortunately, we find that, according to the latest crop of data releases, both the US and Italian economies actually shrank over the first quarter; the German economy expanded but the French economy did not; Japan produced some growth ahead of its “fiscal cliff”’ but China’s economy slowed appreciably.

Unsurprisingly in this weak environment, world trade trends, which had picked up slightly over the fourth quarter of last year on the back of seemingly better Eurozone and Chinese trends, seem to have weakened once again and, perhaps more worryingly, world trade price trends have deteriorated sharply as more and more countries and regions have attempted to simultaneously improve their current account balances by cutting their import bills.

These disappointing global trade trends serve to confirm the generally weak message that has been offered by the latest crop of GDP releases.