The SA Daily
26 May 2020
World trade weakened
- The Central Planning Bureau of the Netherlands forecasts a sharp decline in trade and production in April and May amid the stringent anti-viral measures the world over. The World Trade Organisation (WTO) too expects world merchandise trade to plummet by 13% – 32% in 2020 due to the COVID-19 pandemic. Already, world trade volumes contracted 4.3% y/y (1.4% m/m) in March, after contracting 2.1% y/y (0.7% m/m) in February; and, world industrial production contracted 4.7% y/y (0.2% m/m), after contracting 3.9% y/y, from growth of 0.1% m/m in February.
- In advanced economies, disaggregate data for March shows an even more pronounced 7.7% m/m contraction in euro zone export volumes; a 4.9% m/m contraction in US export volumes; and a 3.4% m/m contraction in Japan’s export volumes. In emerging economies, though, trade has now somewhat recovered in China as export volumes grew 12.4% m/m in March, after contracting 11.6% m/m and 2.2% m/m in January and February respectively. Latin America export volumes grew 2.3% m/m in March, and export volumes in Africa and the Middle East grew 1.3% m/m— but export volumes in Eastern Europe contracted 1.8% m/m.
- Total export and import volumes for SA are set to contract sharply this year, leading to a deep compression of the current account deficit to 0.5% of GDP (from 3.0% in 2019). Further, US-China trade relations being in permanent flux bodes ill for emerging markets and trade, which will exacerbate the already debilitating impact of the pandemic.
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