Trade Views: Covid-19 Losses Equivalent To A Return To 1994 Tariffs

It is expected that by June, nearly all countries should have lifted their generalized “lockdowns.”

However, after a 22.5 percent shock in value terms, trade could remain below 90 percent of its pre-crisis level, even after lockdowns are lifted, according to a May 6, 2020 report published by Allianz Research.

The firm still expects trade of goods to rebound in the second half of the year, following a recovery in the manufacturing sector. “We use the R0, projected end of lockdowns in all countries and the share of each country in merchandise trade to understand at what pace the “lid” on international merchandise trade would be lifted,” Georges Dib and Ana Boata, authors of the report wrote.

Allianz sees that the end of the lockdowns (which should be announced until the end of June in most countries) does not mean an immediate return to normality. But some countries will continue regional lockdowns, and only gradually open all sectors of their economies, while bars and restaurants would operate at a very low capacity for a few additional months.

“We expect merchandise trade to recover in H2 2020 and through 2021, pushing the overall growth next year at +10 percent in volume and +15 percent in value terms,” the economists wrote.