World trade experienced an “unprecedented” decline in April as most big economies suffered from strict coronavirus lockdowns, according to widely watched data which found that the eurozone was the hardest-hit area.
The volume of global trade in goods dropped by 12.1 per cent in April compared with the previous month, according to the Netherlands Bureau for Economic Policy Analysis — the largest monthly contraction since records began in 2000.
The drop exacerbated the 2.4 per cent decline in world trade in March, the bureau’s CPB world trade monitor said, leaving global goods trade volumes 16.2 per cent smaller than the same time last year.
All regions reported a fall in trade volumes, but the eurozone was the hardest hit with trade volumes falling by 20.1 per cent month on month in April. Its goods trade has contracted by 28.5 per cent over the past year.
Trade volumes in the US dropped by 16.8 per cent month on month in April, while trade in emerging Asia, which includes China and India, fell by 6 per cent. Chinese export volumes shrank in April, after a mild expansion in March as the pandemic eased in the country.
Between February and April, the period in which lockdowns were in place in various large economies, “none of the regions shows a plus [in trade activity]”, the bureau said.
“As April was affected by the most widespread and stringent lockdown measures, trade volumes were dragged down by disruptions to production and logistics, as well as less demand for imports worldwide,” said Joanna Konings, senior international trade economist at ING.
Thursday’s data leave global trade on track to be more than 10 per cent lower this year than in 2019, according to estimates by ING.
Adam Slater, lead economist at Oxford Economics, said the data “points to a decline in goods trade in 2020 of a potentially comparable magnitude to that seen in the global financial crisis in 2009”.
Earlier this week the World Trade Organization estimated that global trade would fall by 18.5 per cent in the second quarter of this year, compared with the same period last year.
On Wednesday, the IMF forecast that the volume of goods and services trade would shrink by 12 per cent this year and urged policymakers “to co-operate to resolve trade and technology tensions that endanger an eventual recovery from the Covid-19 crisis”.
Separate data published by the bureau showed that the economic slowdown had hit industrial production hard. Global industrial output dropped by 12.1 per cent year on year in April as factories shut across the globe. Although every region was affected, the eurozone was the worst, experiencing a nearly 30 per cent contraction.
However, there are some early indications that economic conditions are beginning to recover. Economic sentiment surveys of purchasing managers that were published earlier this week showed a substantial rebound.
Alternative data indicators also point to some reopening. There was a rise in global aviation volumes in late May and early June, although from very low levels, and in May the number of containers handled at China’s big ports increased, according to official Chinese statistics.