Global economic growth is slowing due to a slowdown in China driven by President Trump’s trade war. This is the conventional wisdom accepted by most and questioned by few.

We do live in somewhat of an echo chamber in which believable explanations for events are propagated through the digital ether with minimal fact-checking. For investors, this makes life difficult – and yet creates opportunity at the same time.

So let’s follow the data. Yes, it is true that global economic growth is slowing. But growth is still reasonably healthy by historical standards. Indeed, much of the slowdown has to do with the very strong global growth that was generated in late 2017.

Source: Macquarie 

And in terms of the culprit of the slowdown? The data shows it is the Eurozone, not China, which has accounted for the greatest reduction in its contribution to global economic growth.

Ok, well surely the Eurozone must be slowing due to a deterioration in its exports to China. Again, let’s check the data.

Well, as you can see in the chart below on the left, it is true that European net exports have all but evaporated. Yet, as you can see on the chart on the right, it is the Eurozone’s exports to Turkey, not China, which have deteriorated sharply. Indeed, exports to China have remained healthy through the back-end of 2018.

Source: Macquarie

Global economic growth is slowing because it has been unusually strong in recent years and the Eurozone’s exports to Turkey have recently fallen off a cliff. That is a statement I have heard no commentator make. And yet it is probably closer to the truth than most of the conventional wisdom being propagated.


What a nice piece of concise analysis. We need more of this type of analysis rather than much these days that uses an aphorism as a starting point. Many thanks, will watch out for your work in future.

Andrew Macken

Many thanks, Jehangir. Very much appreciate the kind feedback. All the best, -AM

Jean-Philippe Berge

Good analysis and yes it’s a narrative we don’t see elsewhere. I’m not sure though if the impact of the Euro zone exports to Turkey based on volume is substantial?

Andrew Macken

Many thanks. We agree – we’re not particularly concerned by Europe’s exports to Turkey.