US, WASHINGTON (NEWS OBSERVATORY) — The U.S.-China trade war slowed global trade growth in 2019 to its lowest level since 2009 to 1.2% in kind, and this year the outbreak of coronavirus will be the main trade barrier, according to Euler Hermes, the largest in the world of a company specializing in export credit insurance.
According to the company’s calculations, current containment measures in response to the Covid-19 outbreak are already equivalent to 0.7% of additional tariffs for goods, which brings the average world tariff level to 6.5% at the end of the first quarter of 2020.
In other words, for one quarter, world trade has already suffered the equivalent of the annual trade war between the U.S. and China in 2019.
According to Euler Hermes estimates, losses for the sale of goods and services could be $ 320 billion per quarter. Thus, the losses for each quarter in 2020 are comparable to the annual impact of the U.S.-China trade dispute on world tariffs in 2019.
The insurance company expects the resumption of business activity will be gradual in March and April and will reach its maximum level by the end of May.
Losses for export should total $ 161 billion, since by the end of April, demand from China and Europe will have a significant impact.
The trade shock has already been noted in early trading indicators, which signal a decline in trade in physical terms both in the 1st quarter (decrease by 2.5% on a quarterly basis) and in the 2nd quarter (decrease by 1%) in 2020.
The calculations of the insurance company in relation to services indicate a significant reduction in tourists both entering and leaving China, Italy and, in a broader sense, Europe. In addition, there has been a significant decrease in transport services.
The return to normal levels of activity is expected to be very gradual, leading to global export losses of up to $ 125 billion in tourism and $ 33 billion in the transportation industry.
After a slight bounce of 1.6% in the fourth quarter of 2019, Euler Hermes expects global trade to decline by 2.5% year on year in the first quarter and will certainly remain negative in the second quarter.
Contact us: [email protected]
Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.