Fitch Says Falling Commodity Demand Causes Industrial Production To Cool Rapidly And Softer Commodity Prices Such As Copper Are Clear Signs Of Economic Slowdown

Factors that have slowed global trade include tighter monetary policy, reduced fiscal support, and a recovery in the services sector, which contributes less to trade than the goods sector, Fitch said.

The agency said supply chain issues are now no longer a hindrance to global trade, and instead the weakness in trade appears to reflect slowing demand.

“Demand for consumer goods in the U.S. and globally is weakening, reflecting a gradual withdrawal of fiscal stimulus in the U.S., monetary tightening and a rebalancing of demand toward services following the lifting of Covid-19 restrictions.”

Fitch also noted that lower global demand for goods was partially offset by higher demand for services. However, since trade in services only accounts for 22% of total trade, this is not enough to fully buffer the overall slowdown in trade growth.

The agency added that falling demand for commodities had led to a rapid cooling of industrial production and that softer commodity prices such as copper were clear signs of an economic slowdown.