The World Trade Organization (WTO) announced on Wednesday that the Global trade is likely to fall precipitously in the first six months of this year after the key trade index hit record lows.
The WTO Goods Trade Barometer fell to 87.6 from 95.5 in February, suggesting a steep decline in global goods flows. While any readings below the baseline value of 100 indicate below-trend growth, the current level is the lowest on record since the indicator was launched in July 2016, according to Russia Today (RT) report.
The organization said that the current reading captures the initial phases of the Covid-19 outbreak, and shows no sign of the trade decline bottoming out yet.
This is in line with the WTO’s trade forecast presented last month.
The drop in global merchandise trade is expected to range between 13 percent and 32 percent in 2020, depending on how long the pandemic lasts and countries’ responses to the crisis, according to the report.
Trade had already been slowing even before the coronavirus started wreaking havoc across the globe as the volume of world merchandise trade dropped for the first time in ten years in 2019, according to WTO data.
All the sectors included in the trade indicator suffered a steep decline. The automotive sector was hit hardest due to collapsing car production and sales in major economies. While export orders, container shipping as well as air freight were also sharply down, some spheres showed signs of stability. This goes for electronic components and agricultural raw materials.
The downturn came as two of the world’s biggest economies, the US and China, were engaged in a simmering trade row. Despite the two nations signing the first part of the long-anticipated trade deal in January, tensions have started to escalate again recently as Washington tries to pin the blame on China for the coronavirus outbreak.