International imports and exports have fallen to their lowest level for at least four years, according to World Trade Organization figures revealing the economic damage caused by the coronavirus pandemic.
Warning there was little evidence of the downturn ending soon as Covid-19 brings the world economy to an effective standstill, the global authority on trade said it believed import and export activity would fall “precipitously” in the first half of 2020.
The WTO’s quarterly goods trade barometer, which provides real-time information on the trajectory of world merchandise trade relative to recent trends, slumped to 87.6 on a scale where anything below 100 indicates a downturn. Suggesting a sharp contraction in world trade extending into the second quarter of 2020, the reading was the lowest value on record since the indicator’s launch in July 2016.
Shipments of automotive products were the weakest of all, owing to collapsing car production and vehicle sales in major economies. There were also declines in container shipping and air freight across the board, as demand for traded goods fades and supply chains are disrupted by closed factories and ports running at reduced capacity.
The downturn follows weaker levels of global activity last year amid the US-China trade war, triggered by the world’s two biggest economies imposing punitive trade tariffs on imports.
Experts said the coronavirus crisis could accelerate the unpicking of globalisation after decades of ever closer integration between countries. Set in motion in the wake of the 2008 financial crisis, the trend comes against a backdrop of rising concern over the impact of trade liberalisation for jobs and the environment.
Exposing the dependence of national economies on sprawling global supply chains, the crisis could encourage businesses to choose suppliers closer to home, helping to avoid future disruption while also promoting the creation of local jobs and cutting carbon emissions.
Geraldine Sundstrom, a managing director at the bond fund manager Pimco, said: “As restrictions are lifted, economies will ultimately recover from the pandemic-induced recession, but it is questionable to assume that everything will go back to the way it was.
“As old inefficiencies are identified and new preferences developed, the changes that the Covid crisis has led to might be more permanent than we think and have more consequential implications.”