The volume of world merchandise trade is likely to fall precipitously in the first half of 2020 as the COVID-19 pandemic disrupts the global economy, according to the WTO Goods Trade Barometer released on 20 May.
The index dropped to 87.6, the lowest value on record since the indicator was launched in July 2016. For the WTO, this indicates that “a strong contraction in world trade that extends into the second quarter”.
This measure is consistent with the WTO’s trade forecast issued on April 8th, which estimated that world merchandise trade could decline by between 13% and 32% in 2020, depending on the duration of the pandemic and the effectiveness of policy responses.
According to WTO, all of the barometer’s components are currently well below trend. The automotive products index (79.7) was weakest of all, due to collapsing car production and sales in major economies. The sharp decline in the forward-looking export orders index (83.3) suggests that trade weakness will persist in the short-run.
Declines in the container shipping (88.5) and air freight (88.0) indices reflect weak demand for traded goods as well as supply-side constraints arising from efforts to suppress COVID-19. Only the indices for electronic components (94.0) and agricultural raw materials (95.7) show signs of stability, although they too remain below trend.