Exports Collapse as Coronavirus Freezes International Trade



Andrew Soergel|U.S News & World Report| Global Trade| World Trade|Crisis|

U.S. GOODS EXPORTS FELL off a cliff last month, as the global economy froze in the wake of an ongoing coronavirus pandemic that has sickened more than 1 million people in the U.S. and more than 3 million around the world.

Exports of U.S. goods plummeted roughly 6.7% in March – their most significant decline since the world was in the throes of the financial crisis of 2008. Shipments of American automotive were down nearly 18% last month, while industrial supply shipments dropped 7.5%.

And experts are warning that this is only the beginning of international trade disruptions. Historic economic weakness is expected in the coming months at home and abroad as the world only gradually reawakens from a commerce freeze that saw nonessential businesses shuttered in several countries across the globe. Demand for personal protective equipment and medical supplies has never been higher in many cases, but most other sectors have been adversely impacted by global factory shutdowns and depressed consumer demand.

“The coronavirus pandemic is set to have a massive impact on world trade,” Adam Slater, lead economist at Oxford Economics, wrote in a research note on Tuesday. “Steep falls in industrial output will hit trade in goods hard, while the unusually service-driven nature of the emergent recession also means services trade will plummet.”

The trade deficit spiked 7.2% last month as imports of international products into the U.S. contracted at a slower pace than the country’s exports. Imports were down just 2.4% – also led by a 9% decline in automotive shipments. Consumers are widely believed to have put off significant purchases of cars and other relatively high-priced items, given the world’s general state of the labor market and economic upheaval.

With a slow recovery expected in the months ahead, analysts predict 2020 will be the worst year for international trade at least since the global financial crisis, and possibly even worse than that, given the sheer number of industries that have been affected by the coronavirus outbreak. Slater predicts global trade could contract by as much as 15% this year, compared with a 10% decline during the financial crisis.

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