World trade tipped to fall sharply due to pandemic

Industry News | | MIC Customs Solutions |

By June, global trade in goods is likely to be significantly down, the WTO has warned.

The latest Goods Trade Barometer from the World Trade Organisation (WTO) has predicted that the volume of world merchandise trade will fall sharply during the first half of this year as the coronavirus pandemic continues.

Its data, published this week, suggested a new global recession is all but inevitable now due to export orders, international air freight, container shipping, car production and electrical components manufacturers all taking a hit.

The index was found to have fallen from 95.5 in February to 87.6 this month, the lowest recorded since its inception in July 2016. Anything above the baseline value of 100 would indicate growth.

Worst affected was the automotive products index, which declined to 79.7 as car plants halted production and sales in all the major economies nosedived.

There were also gloomy figures from air freight (88) as countries closed their borders to halt the spread of the virus and airlines were forced to cancel flights.

The WTO has warned there is no sign of the decline bottoming out yet and said it thinks import and export activity would fall "precipitously" during the first six months of 2020.

It comes after the WTO's trade forecast from April also estimated global merchandise trade would be down by between 13 and 32 per cent due to coronavirus, with the severity depending on how long the pandemic lasted.

Global trade activity had already been relatively low last year, with China and the US continuing their prolonged trade war and applying more and more tariffs on goods.

Following this latest release from the WTO, experts and analysts have said the ongoing effects of coronavirus could be far-reaching as nations attempt to reduce their dependence on global supply chains.

Some say they believe it will prompt businesses to look to suppliers closer to home in a bid to minimise future shocks and continue the pattern of lower emissions recorded since the virus started to spread.