World trade is recovering faster than after the financial crisis

The hard Corona slump is followed by a rapid recovery: Most recently, global trade in goods was only around 9 percent below the pre-crisis level. This is what Kiel economists report on the basis of ship movements.

Container ship in the port of Hamburg

Dhe global goods trade is recovering significantly faster in the corona crisis than in the financial crisis of 2008/09, according to the Kiel Institute for the World Economy (IfW). After a strong slump, a V-shaped revival is now emerging, the Kiel researchers announced on Monday. Global trade in goods in June was only around nine percent below the level of February 2020.

According to the IfW, it had previously collapsed by 15 percent from February to April 2020. In 2008/09, the recovery only started eight months after the slump. “World trade seems to be reacting much more robustly today,” said IfW President Gabriel Felbermayr. “Instead of a U-shaped course of the crisis, there is a more rapid recovery in a V-shaped course: hard slump and rapid recovery.”

The IfW economists see the same pattern for trade in the euro area. This collapsed by 23 percent from February to April 2020 – and thus significantly more than the global average and more than after the Lehman Brothers bankruptcy. In June 2020, however, it was only around ten percent below the level in February, explained Felbermayr. “Here too, in contrast to the 2008/09 crisis, there is a V-shaped development in trade volumes.”

These findings would be supported by the development of shipping activity in important regions, measured against the total capacity of the container ships observed. “In America, Asia and Europe, ship movements have normalized.” The freight capacity now observed is everywhere again in the range that can be expected for the end of August even without a crisis. “Asia showed the clearest recovery effect in July and even exceeded expectations for the volume of trade in that month,” explained the Kiel economists.