Global trade to decline 27% in second quarter due to Covid-19, UN says
Covid-19 crisis cut global trade values by 3% in the first quarter with rate of decline expected to accelerate
Global trade is expected to decline 27 per cent in the second quarter of 2020, compared to the previous three months, as global production falls due to the coronavirus pandemic, according to the United Nations.
World merchandise trade value is forecast to fall about 27 per cent in the second quarter as global production and manufacturing output are set to decline 9 per cent year-on-year, according to the latest data by the United Nations Conference on Trade and Development (UNCTAD) in a joint report with 36 international organisations. Global trade fell by three per cent in the first quarter of the year, compared to the fourth quarter of 2019.
"Covid-19 has turned the world upside down. Everything has been impacted. How we live and interact with each other, how we work and communicate, how we move around and travel," the UN agency said on Wednesday. "Decisions made now and in the coming months will be some of the most important made in generations. They will affect people all around the world for years to come."
The pandemic has disrupted daily life, paralysed air travel, wiped out at least $17 trillion (Dh62.4tn) from stock markets worldwide and forced governments to introduce economic stimulus packages worth more than $8tn as countries went into lockdown.
The UN agency's wide-ranging report--covering aspects including economy, social impact, human rights, poverty, migration and the environment-- presents a snapshot of the latest statistics available on how Covid-19 is affecting the world today.
The pandemic has unleashed the biggest employment decline since the Second World War, delivering an "unprecedented shock" to labour markets, it said.
The number of hours worked by employees globally could drop in the second quarter by 10.5 per cent, equivalent to 305 million full-time workers with a 48- hour work week and outpacing the decline in work hours during the 2008 financial crisis. That follows a 4.5 per cent decrease in the first quarter due to countries implementing lockdowns.
By the beginning of April, 81 per cent of the global workforce lived in countries with mandatory or recommended workplace closures. By April 22, that rate declined to 68 per cent as China went back to work.
"There is typically some delay for a drop in economic activity to translate into a drop in employment, but in the current crisis the impact on employment was immediate and sweeping, as a result of lockdowns and other measures," UNCTAD said, adding workers will face loss of incomes and poverty as a result.
Among industries, aviation bears the heaviest burden as a result of Covid-19 because the outbreak has paralysed the movement of people and goods, the agency said.
In March, when WHO declared Covid-19 as a pandemic, airlines slashed 38 per cent of seat capacity, passenger demand plunged 54 per cent, airlines lost an estimated $28 billion in revenues, while airports providers lost around $8bn, UN aviation body ICAO said in the report. The outlook for April is expected to deteriorate further, it said.
"It is of utmost priority to uphold the aviation industry’s financial and functional operability in order for it to deliver on its value in overcoming the consequences of this unprecedented crisis," ICAO said.
Cash-strapped airlines have urgently called on governments to provide financial rescue packages to help them survive the crisis.
By extension, the Covid-19 crisis poses an "unprecedented challenge" for the tourism industry. It faces declines of 60 to 80 per cent in international tourist arrivals this year compared to 2019, depending on when travel restrictions are lifted, the UN World Tourism Organisation said in the report.
Countries with the highest number of reported coronavirus cases--topped by the US, Spain, Italy, Germany, and China-- account for about 55 and 68 percent of global inbound and outbound tourism expenditure, WTO said.
Developing countries where inbound tourism spending accounts for a quarter of the GDP are the most vulnerable to the impact of Covid-19.
The Covid-19 crisis, which has tipped the global economy into the worst recession since the Great Depression of the 1930s, could push 40 to 60 million people into extreme poverty, according to World Bank estimates in the report. Sub-Saharan Africa may be the hardest-hit region.
The social impact of the pandemic is no less devastating than its economic consequences as it is "threatening fragile gains on gender equality and women’s rights," UN Women said.
While more men are dying of the disease, some groups of women are particularly vulnerable during this crisis. Women comprise 70 per cent of the global healthcare workforce and are in close contact with patients, therefore facing a higher risk of infection.
Women, who on average do three times as much unpaid care and domestic work as men, are facing an intensified workload due to school closures and overloaded health systems.
Crucially, widespread job losses will have "long-term impacts for women's economic independence and security," the report said. With 740 million women globally in informal employment and a majority employed in services, women are "particularly hard hit" by the crisis.
The economic impact of the pandemic is being felt in every region, in line with the projections of the International Monetary Fund. The Washington-based lender projects the global economy will shrink 3 per cent in 2020, a sharp revision from a previous 3.3 per cent expansion forecast and a grimmer outlook than the 2008 financial crisis. The fund expects a partial recovery for 2021.
The first effects of the crisis were reflected in the preliminary flash estimates of EU GDP figures which fell by 3.5 per cent in the first quarter – the sharpest fall since 1995, according to UNCTAD.
On Wednesday new released data showed the UK economy contracted 5.8 per cent in March and contracted 2 per cent in the first three months of the year.
In the Gulf, UNCTAD forecasts regional economies will contract in 2020 between 0.6 per cent to 1.9 per cent, but sees a recovery of between 0.5 per cent and 2.5 per cent in 2021.
Updated: May 13, 2020 04:50 PM