World Trade Organization: Global trade to drop ‘precipitously’
The World Trade Organization (WTO) has said international trade is set to drop “precipitously” in the first half of 2020 as coronavirus wreaks havoc on global supply chains and consumer demand.
The WTO’s gauge of the health of global trade fell to 87.6, its lowest reading since the goods trade barometer was launched in 2016.
In a report, the international organisation said the reading only captures the initial phase of global coronavirus lockdowns, and “shows no sign of the trade decline bottoming out yet”.
Global trade is set to drop by between 13 and 32 per cent this year, the WTO said, depending on how long the pandemic lasts and how effective government measures are.
Trade in cars is set to suffer the most in the first half of the year, as lockdowns cause both production and demand to plunge.
Agricultural trade has been the least affected as essential food shops have remind open. But it is still below trend.
The World Trade Organization, which promotes free trade and lays down trade rules, said trade had already slowed in 2019 going into the pandemic.
“The volume of world merchandise trade shrank by 0.1 per cent in 2019, marking the first annual decline since 2009, during the global financial crisis,” the report said.
At the heart of the 2019 slowdown was the US-China trade war. It saw the world’s two biggest economies ramp up tariffs on each others’ goods and dent economic confidence around the world.
Investors fear that another flare-up in US-China trade tensions could damage the recovery from the coronavirus crash.
The US has dialled up the anti-China rhetoric throughout the pandemic. It has even accused China of releasing coronavirus from a lab, without providing any evidence.
At the end of April, markets were spooked when US President Donald Trump raised the prospect of more tariffs on Chinese goods.
However, the two sides have said they are working cooperatively to implement the phase one trade deal signed at the start of the year.