The World Trade Organization (WTO) expects global trade to decrease anywhere between 13% and 32%, with the wide spread due to the uncertainty behind the economic impact of the ongoing COVID-19 health crisis. To put the numbers in perspective, the largest drop during the 2009 financial crisis was 12.5%.
However, the WTO has an optimistic undertone, pointing out that this depression is different from the previous one and the Great Depression of the 1930s, as the economy was in good shape before the sudden collapse triggered by the pandemic. “The pandemic cut the fuel line to the engine,” said WTO Director-General Roberto Azevedo. “If the fuel line is reconnected properly, a rapid and vigorous rebound is possible.”
Did you know?
For the week ended April 3, American consumers used an average of 5.06 million barrels of finished motor gasoline each day, while airplanes used an average of 755,000 barrels per day of jet fuel, according to the U.S. Energy Information Administration’s latest weekly estimate of demand for petroleum-based fuels. These figures are down about 50% from comparable periods in recent years.
“The automakers said they could break even with U.S. sales as low as 10 million to 12 million. But those estimates depended on continued operations, which they don’t have. It’s the stop and the restart that is going to suck capital. And if we have to do it more than once, that is going to be terrible.”
– Kristin Dziczek, vice president of research at the Center for Automotive Research, a Michigan think tank, commenting on the drop of sales during the pandemic.
In other news
Saudi Arabia sends a wave of supertankers to the U.S. ahead of oil meeting
Saudi Arabia is looking to flood the world with oil even as demand collapses. (Oilprice)
Alphabet’s delivery by drone surge to stay-at-home customers
Toilet paper, baby food and pastries are among the frequently flown products to homes in Virginia. (Bloomberg)
Millions of jobs are at risk as fashion and luxury sales fall off a cliff
Business in the fashion industry will sink by 30% this year, according to a report from trade journal Business of Fashion and consulting firm McKinsey & Company. (CNN Business)
Levi’s ramps up ship-from-store to move inventory trapped in dark stores
The company withdrew forward-looking guidance while 70% of its 565 stores are closed due to the coronavirus pandemic. (Supply Chain Dive)
India’s food supply chain frays as people stay home
The country’s reliance on people’s power to harvest, distribute and sell goods leaves it vulnerable during the coronavirus shutdown. (WSJ)
In a survey run by The Wall Street Journal to understand the impact of COVID-19 on the economy, business and academic economists expect the unemployment rate to hit 13% in June, and keep steady at 10% by December. Economists predict the GDP to contract by a massive 25% in the second quarter, an extreme reversal in stance from the March survey, where the expectation was a mere 0.1% shrinkage between April and June. That said, 85% of the economists believe the economic recovery will start in the second half of the year.
Hammer down everyone!