High differences in foreign trade sectoral collapses
2020 world trade fall may be close to the collapse recorded during the Great Recession, but with greater sectoral dispersion
Published by Giulio Corazza. .Automotive Global demand Uncertainty Global economic trends
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Economic analyses lead to estimate the fall in world trade in quantity for 2020 at around -15%. This collapse is very similar to the one suffered in the 2008-2009 crisis. Compared to the Great Recession, however, the sectoral dispersion of world trade is much greater: in April some sectors saw a huge decrease, while others even recorded an increase.
A measure of this aspect can be obtained by quantifying the share of products whose world trade collapsed by more than 50% in April 2020 compared to the corresponding month of 2019; those whose collapse is between -50% and -30% and between -30% and -10%; those whose variation is between -10% and +10% or more. The graph below shows the April 2019 world trade shares of the five clusters identified on the basis of the rates of change between April 2019 and April 2020.
The graph shows that most of the products analyzed saw a decrease in trade for the month of April 2020 compared to the same month in 2019. The largest share of products saw a contraction in terms of world trade between -30% and -10%. About a quarter of the products analysed fell sharply, between -50% and -30%, and a tenth fell by more than 50%.
The remaining quarter is divided between those products that have experienced substantial stability, with variations in world trade between -10% and +10%, and those whose trade has been growing, i.e. more than 10%. The latter cluster includes 5% of world trade. The dispersion of results in terms of world trade shows that not all products have been affected in the same way. Some have seen growth, while others, such as Automotive and Luxury products, have shown the worst performances.
In this article we have deepened this aspect, focusing the analysis on those products that in April 2020 have suffered the greatest contractions in terms of traded values compared to April 2019.
Globally, the transport industry has been the most affected. For this sector, exports decreased by 58% in April 2020 compared to the same month in 2019.
This collapse is generalised to most of the products of the transport industry: not only luxury products such as sports cars, which contracted by 3.9 billion in April 2020, but also commercial vehicles and mid-sized cars.
It should also be stressed that this collapse is not just confined to finished products. The entire production chain has been strongly affected. The collapse in world trade also affected intermediate products, such as automotive components including engines and spare parts.
Among the most affected products we can also find the luxury sector, such as jewellery and haute couture.
It is clear that, at a time of great uncertainty such as the one we are experiencing, trade in luxury goods is not running as fast as it would in a normal context.
In April 2020, the international trade of diamonds for jewellery fell by almost $5 billion compared with the corresponding month in 2019. In addition, trade in precious metal jewellery went down by $3.4 billion and trade in works of art and collectibles by $1.6 billion.
As for the fashion sector, world trade in shoes showed a strong decrease (-$2 billion), as well as blue jeans and t-shirts (-$2 billion) and women's handbags (-$700 million). Some cosmetics products experienced a sharp decrease, as well.