Global goods trade slows as coronavirus expected to dent growth
Global trade in goods is set for further weak growth this year and will potentially be made even worse by the deadly coronavirus outbreak in China.
World Trade Organization’s (WTO) goods trade indicator fell to a reading 95.5 this month, down from 96.6 in November. A reading of 100 or above is a sign of medium-term growth.
Today’s reading does not factor in the impact of the coronavirus, which could further weigh on trade prospects due to a widespread slowdown in China’s economic output.
In total, the volume of global goods traded in the third quarter of 2019 fell 0.2 per cent on the previous year. The WTO said that although the numbers may pick up in the fourth quarter, there was no guarantee of a “sustained recovery”.
The decline is largely down to further drops in areas such as container shipping and agricultural raw materials, which fell to 94.8 and 90.9 respectively.
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The automobile products index has also plateaued at exactly 100.0, whilst export orders, air freight and electronic components all remain below the baseline.
The WTO added: “Every component of the goods trade barometer will be influenced by the economic impact of Covid-19 and the effectiveness of efforts to treat and contain the disease”.
The barometer chimes with Moody’s outlook for global GDP growth, which predicts that G20 economies will grow a collective 2.4 per cent in 2020, a slower rate than last year, largely due to the outbreak.
Moody’s vice president Madhavi Baki said: “The outbreak will first and foremost hurt China’s economy by lowering discretionary consumer spending on transportation, retail, tourism and entertainment.
“There is already evidence – albeit anecdotal – that supply chains are being disrupted, including outside China. Furthermore, extended lockdowns in China would have a global impact given the country’s importance and interconnectedness in the global economy”.
The financial services firm said that the toll on the world economy would be “severe” if the rate of infections did not abate, but that it expected the spread to be contained by the end of the first quarter, allowing for normal economic activity to resume in the second quarter.