Years from now when tales of the 2020 Pandemic are retold to the next generation, the economic side of these stories won’t need embellishment.
In just a few months, a microscopic virus plunged the world economy into a recession and hammered global trade harder than the global financial crisis, the Sept. 11 attacks, or the 1973 oil embargo.
World War II couldn’t even muster the same kind of sudden knockout that has paralyzed supply chains and rendered the world’s most bustling cities into ghost towns. The World Trade Organization’s chief economist is comparing it to the kind of economic destruction normally seen in wars, minus the actual rubble.
Consider these figures, some of which were recorded before much of the U.S. and Europe were locked down:
The port in Shanghai — the busiest in the world — saw a 20% year-over-year drop in container throughput in February. Cargo volume at the Port of Long Beach last month declined 10% from a year earlier, and the neighboring Los Angeles port was down 23%. Total container throughput at Hong Kong’s port fell 11% on a cumulative basis in February. Europe’s largest seaport, in Rotterdam, witnessed a “significant” drop in throughput volumes for all cargo flows this quarter. On the U.S. East Coast, the Port of Savannah saw a 20% drop-off in container business in March. The U.S. experienced an unprecedented 45% year-on-year slump in imports from China during the first two weeks of March.
These figures are only beginning to display in real time the historic, and hopefully temporary, global economic contraction. The focus now is on global policy makers who are advancing massive economic rescue plans to blunt the immediate impact of the virus.
After the health crisis recedes, governments and companies must make crucial economic decisions about how and when to reboot their economies and supply chains. The choices they make in the days ahead will undoubtedly color the stories told for many years to come.
Charting the Trade Turmoil
U.S. exports, already in a steady decline, are poised to weaken further and imports may not fare much better as the American and European economies grind to a halt. To track U.S. trade data, follow the AHOY function on the Bloomberg.
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