While investors worry if a Greek debt default could bring on a global economic collapse in 2015, one indicator suggests the crisis has already begun.
According to the World Trade Monitor, world export prices in April declined by 15.8% year-over-year. This represented the biggest decline since the financial crisis of 2008 and could be an indication that the global economy is already in the midst of a deep recession.
The plunge in world export-import prices is said to be a leading indicator for the overall economy. Hence, the dramatic decrease in the global transactions suggests that the prices of goods and services being traded among countries moved to the level last seen in 2009. These numbers suggest global trade is on the verge of collapse.
Import prices tend to lag export rates by a couple of weeks. However, there too, pressure on prices is building.
Investors should pay close attention to these monthly numbers as trade transaction among countries would correspond to how confidently their citizens are spending on imported goods.
While most government officials contend the global economy is recovering, these trade numbers could force economists to dial down their growth expectations for the second half of 2015. In the U.S., the Federal Reserve has repeatedly said that the federal funds rate will go up this year after being kept to near zero for a decade. However, recent data may force policy makers to revise down their economic outlook estimations for the second half of 2015 and even postpone their increase of interest rate to next year or even later.