World Trade Shrank Most Since GFC In March, Just Ahead Of Virus Lockdowns

Late last month, I highlighted the latest data from the Dutch government planning agency CPB, which showed world trade contracted 1.5% in February from the previous month on the initial estimate.

The CPB publishes a World Trade Monitor every month on behalf of the European Commission.

Fast forward four weeks, and we have the data for March. (It takes two months for the figures to become available.) It’s not particularly inspiring, even as it doesn’t show a total debacle – yet. On a YoY basis, March’s decline was 4.27%, the largest since the GFC by a long shot.

The revised data shows February’s MoM contraction was just half of the previously reported 1.5% decline, but March’s MoM decline (1.4%) means world trade shrank for three months straight headed into April.

One certainly imagines the picture will be considerably more bleak when the April estimates are available a month from now. “We expect a stronger decline in trade and production in April and May, in line with a tightening of COVID-19 measures in many regions”, the CPB says.

They note vast disparities between regions for March.

“The downturn is particularly strong in Europe, with trade falling by more than 7% and industrial production falling by over 12%”, the color that accompanies the latest release reads. “In China, trade and production rebounded in March, following a sharp decline in January and a consolidation in February”.

“World trade [is] set to plummet for months ahead”, ING said, commenting on the new CPB numbers.

“The number of container ships for anchor… indicate that trade has been falling throughout May too”, the bank remarks, adding that in their view, “cancellations of selected major container shipping lines including the world’s largest container ships indicate that Asian imports are declining again”.

(ING, BBG)

Early last month, the World Trade Organization warned that world merchandise trade is set to plunge by between 13% and 32% in 2020 due to the pandemic.