COVID-19 Trade Watch (May 29, 2020)

The contraction in the nominal value of global merchandise trade that began in mid-2018 deepened in March, with global exports of merchandise trade declining by 11.9 percent in March year-on-year (YoY), and global imports of merchandise trade declining by 12.4 percent YoY. The regional contraction in trade was deepest in the Middle East and North Africa, South Asia, sub-Saharan Africa, and the EU27. Data from early-reporting countries indicates that the global trade contraction deepened further in April, possibly reaching a level of severity comparable to the Great Trade Collapse in 2009. Agriculture trade is holding up, despite initial fears. For China, EU27, Japan, and the United States as a group, exports of intermediate agricultural goods (closer to the farm than the table) were up 8.1 percent YoY in March, with imports up 7.1 percent. For the same countries, exports of food and beverages for final consumption were up 2.6 percent YoY in March, with imports up 11.7 percent. Medical goods trade surged in March, at least in value terms. Imports in China, EU27, Japan, and the United States were all up YoY in March, while exports of China and the EU increased by double digits from the previous year. Trade in transport equipment, extractives, and capital goods has plummeted – largely reflecting weak demand and investment (and for extractives, falling oil prices). For transport equipment, imports of intermediates in China, EU27, Japan, and the United States fell by 10.5 percent YoY in March, and imports of consumer vehicles fell by 14.9 percent. Imports of intermediate fuel and lubricants fell by 21.9 percent YoY in March, while imports of capital equipment (including transport capital equipment) fell by 12.5 percent. Trade in industrial intermediates held steady, suggesting that the core activities of global value chains (GVCs) were relatively resilient, contrary to conventional wisdom. For China, EU27, Japan, and the United States as a group, exports of intermediate industrial supplies (other than food and beverages, fuel and lubricants, and intermediate capital goods) were up by 0.3 percent YoY in March, while imports were down by 0.4 percent. The correlation between epidemiological measures of COVID-19 and changes in exports and imports in is weak. This suggests that the trade contraction had already globalized by March. Country-by-country differences in the trade slowdown may largely be driven by local differences in the implementation of lockdowns and GVC linkages. Global services trade slowed by less than merchandise trade, similar to the 2008-2009 recession. Sharp declines in travel and transport services and tourism were partially offset by increases in trade for telecommunications, computer, and information services which promote remote work and e-commerce. Container throughput stabilized in April, while commercial air transport declined sharply. In April, container throughput in China Ocean Shipping Company’s (COSCO) Chinese and Mediterranean ports increased YoY, as did import container throughput in Long Beach. The number of commercial flights globally has decreased substantially—from 115,300 on January 9, 2020, to just 24,000 on April 19, 2020. Modest increases in U.S. passenger flights were observed in the first part of May.