In light of the ongoing coronavirus crisis, Allianz issued a research considering that the disease will bring greater impacts, worst than those of the US-China trade war. In fact, the research reveals that the losses of trade in good and services may amount $320 billion per quarter following the business disruption.
Specifically, researchers expect that the COVID-19 outbreak will act as a major trade barrier in 2020. According to their calculations, the restriction measures against the disease, are already equivalent to +0.7pp of additional tariffs on goods, bringing the world tariff average to a notional 6.5% at end of Q1 2020.
That means that, in one quarter, the global trade has already suffered from the equivalent of the full-year trade war between the U.S. and China in 2019.
Each quarter of Covid-19 related trade losses in 2020 is thus comparable to the annual impact of the U.S.-China trade dispute on world tariffs in 2019. We expect the resumption of business activity to be gradual in March and April and reach full speed by the end of May.
…As researchers noted.
At the same time, export losses are estimated to come at the total amount of $161bn, since demand from China and Europe will remain remarkably affected by the end of April.
A drop in the tourist industry is also expected to be seen. Tourist from and to China, Italy and intra-Europe countries, will mark a slowdown in transport services.
The return to normal levels of activity is expected to be very gradual, pushing global export losses to USD 125bn on the tourism side and USD33bn for transport services.
The shock that trade market is going through due to the coronavirus crisis, is already visible in early trade indicators, which signal a trade recession in volume terms both in Q1 (-2.5% q/q annualized) and Q2 (-1%) 2020.
As the International Chamber of Shipping forecasts, COVID-19 has removed more than 350.000 containers from global trade. Specifically, there have been marked 49% fewer container sailing operations from China in the last four weeks.
The forecasted drop of 20-25% in global shipping industry throughput will have a corresponding impact on the port terminal industry as well.
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