Global commercial contracts as coronavirus strikes global economy

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World trade fell at its fastest pace since the financial crisis in February, when the coronavirus hit Asia, an early sign of a further deterioration in the volumes of goods that economists expect with the spread of the virus worldwide .

The volume of world merchandise trade fell 2.6% in February from the same month last year, according to a global trade observer published by the Netherlands Bureau for Economic Policy Analysis.

Compared with the previous month, world trade fell 1.5%, the second consecutive contraction this year. World trade volumes had already slowed due to last year’s trade war between the United States and China.

“As Covid-19 causes plant outages and cuts spending worldwide, a wave of declining trade volumes follows [spread of the] virus, “said Timme Spakman, economist at ING. “Despite a sharp drop in international trade volumes, the extent of the Covid-19 crisis is still not reflected in these figures.”

China registered a 7.3% drop in imports in January, making it the first country in the world to shut down parts of its economy to stem the spread of the virus; imports fell 3.2% in February, data released Friday showed.

Imports into Japan contracted almost 9% in February from the previous month, the largest contraction of any major economy.

Industrial production in emerging Asian economies fell 9% in February from the same period last year, according to data also produced by the CPB.

Year-over-year line graph,% showing world trade volumes plunge

Western countries were less affected because the virus did not hit their economies at the time. The United States reported no change in trade volumes from the previous month, while euro area trade volumes fell 1.5% due to lower exports .

Trade data “shows that world trade was already contracting before the main impact of the coronavirus was even felt,” said Adam Slater, chief economist at Oxford Economics. “The impact of the virus on global demand and supply chains means that in the coming months, global trade volumes are expected to decline by double digits annually.”

About 20 to 30 percent of planned container ship departures have been canceled until May, according to market intelligence company Ocean Insight. In a survey of 300 transportation and freight professionals worldwide by the firm this month, 71% said they experienced a drop in volumes.

Editor’s note

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A monthly global survey of purchasing managers’ activity by IHS Markit and JPMorgan in March found that exports had fallen to the lowest level since the survey began in 2014.

This month, the World Trade Organization warned that global merchandise trade would drop by a third this year, more than it did during the financial crisis, while millions of people around the world stay at home. limit the spread of the virus.

Gabriella Dickens, an economist at Capital Economics, said, “Overall, we expect the coronavirus to drop a fifth of the world’s trade volumes this year.”

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