The coronavirus pandemic has led to a three per cent drop in global trade in the first quarter of 2020 and this downturn is expected to accelerate in the next quarter to project a whopping quarter-on-quarter decline of 27 per cent, the UN trade body has warned.
The United Nations Conference on Trade and Development (UNCTAD) said in a report that the drop in global trade was accompanied by marked decreases in commodity prices, which have fallen precipitously since December last year.
The report is a product of cooperation between the international statistics community and national statistical offices and systems around the world, coordinated by UNCTAD.
"Everywhere governments are pressed to make post-COVID-19 recovery decisions with long-lasting consequences," said UNCTAD Secretary-General Mukhisa Kituyi.
The coronavirus pandemic cut global trade values by 3 per cent in the first quarter of this year, according to the latest data published in the joint report by 36 international organisations.
The downturn is expected to accelerate in the second quarter, with global trade projected to record a quarter-on-quarter decline of 27 per cent, said the report compiled by the Committee for the Coordination of Statistical Activities (CCSA).
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UNCTAD's free market commodity price index (FMCPI), which measures the price movements of primary commodities exported by developing economies, lost 1.2 per cent of its value in January, 8.5 per cent in February and a whopping 20.4 per cent in March, it said.
Plummeting fuel prices were the main driver of the steep decline, plunging 33.2 per cent in March, while prices of minerals, ores, metals, food and agricultural raw materials tumbled by less than 4 per cent.
The more than 20 per cent fall in commodity prices in March was a record in the history of the FMCPI. By comparison, during the global financial crisis of 2008, the maximum month-on-month decrease was 18.6 per cent.
At that time, the descent lasted six months. Worryingly, the duration and overall strength of the current downward trend in commodity prices and global trade remain uncertain.
Before the COVID-19 pandemic sent international commerce into a tailspin, global merchandise trade volumes and values were showing modest signs of recovery since late 2019.
"In this time of crisis, we are putting out the facts as we know them today. We'll continue monitoring the global trade landscape as it evolves," said UNCTAD's chief statistician, Steve MacFeely.
The UN forecast on Wednesday that the global economy will contract sharply by 3.2 per cent as the COVID-19 pandemic paralyses the world, sharply restricting economic activities, increasing uncertainties and unleashing a recession unseen since the Great Depression of the 1930s.
The pandemic, which is disproportionately hurting low-skilled, low-wage jobs, while leaving higher-skilled jobs less affected - will further widen income inequality within and between countries, it said.
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