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The SA Daily 26 June 2020

Trade still locked down

  • Per World Trade Monitor data, April world trade volumes contracted sharply, by 12.1% m/m (16.2% y/y), after the 2.4% m/m (5.4% y/y) March contraction. April was the worse m/m contraction since 2000, deeper even than the 6.2% m/m contraction in December 2008 during the GFC. In April, world industrial production too took a hard knock, contracting by 8.1% m/m, after a 0.2% m/m March contraction.
  • World export volumes contracted, by 13.4% y/y; and, world import volumes contracted by 10.7% m/m in April.
  • South Africa’s major trading partners’ world imports contracted sharply as well; euro zone imports contracted 17.0% m/m in April, after contracting 9.4% m/m in March; China contracted 3.8% m/m, after growth of 6.3% m/m in March; the US contracted 11.3% m/m, after growth of 0.4% m/m in March. For SA, this will be dire for export commodities and earnings; we forecast SA real exports to contract by 11.7% this year.
  • The IMF forecasts world trade to contract by 11.9% in 2020, after growth of just 0.9% in 2019, as demand for goods and services including tourism was exceedingly weak. Per the IMF, global trade contracted by near 3.5% y/y in 1Q20 on weak demand, collapsed cross-border tourism, and supply disrupted by lockdowns, exacerbated in some instances by trade restrictions. Beyond this pandemic, the IMF advices policymakers cooperate in addressing the economic issues underlying trade and technology tensions as well as the gaps in a rules-based multilateral trading system.

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