Global trade is forecast to fall by a record 27% in the second quarter of the year after a slump in the export of cars, machine parts and oil.
The coronavirus pandemic has hit the supply and demand for products across the world leading to a severe decline in world trade, said Unctad, the United Nations organisation that tracks trade flows.
Almost every category of goods is expected to suffer a fall in trade over the coming months, adding to a 3% decline in the first quarter of the year.
Unctad said the data revealed the huge shock to the global economy from the Covid-19 pandemic.
China was the first country to report a decline in trade ahead of a lockdown put in place by the authorities in Beijing in February. The rest of the developed world followed in March when similar lockdowns were announced.
Many of China’s factories have opened in the meantime, but reports from the world’s second largest economy show a significant proportion of the country’s industry is still operating at between 60% and 80% of capacity.
In recent days local authorities in China have put cities in the country’s north-east back into lockdown and closed some schools for a second time after new Covid-19 infections emerged.
Last week the International Monetary Fund warned that a previous forecast for an unprecedented decline in global GDP growth of 3% this year, the worst since the 1930s depression era, was looking optimistic.
The IMF forecast a partial rebound would follow in 2021, but warned outcomes could be far worse, depending on the course of the disease.
Stephen Gallo, the European head of foreign exchange strategy at BMO Capital Markets, said: “Though a lot of progress has been made, China’s economy is still operating below pre-Covid levels.”
Europe, the US and much of central and south America are beginning to ease lockdowns, but are not expected to bring all parts of their economies back to life for several months.
Unctad said the drop in global trade was accompanied by a record decrease in commodity prices, which it said had “fallen precipitously since December last year”.
A free market commodity price index (FMCPI), which measures the price movements of primary commodities exported by developing economies, lost 1.2% of its value in January, 8.5% in February and 20.4% in March.
Plummeting fuel prices were the main driver of the steep decline, plunging 33.2% in March, while prices of minerals, ores, metals, food and agricultural raw materials tumbled by less than 4%, according to the report.
Unctad said: “By comparison, during the global financial crisis of 2008, the maximum month-on-month decrease was 18.6%.
“At that time, the descent lasted six months. Worryingly, the duration and overall strength of the current downward trend in commodity prices and global trade remain uncertain.”
Before the Covid-19 pandemic sent international commerce into a tailspin, global merchandise trade volumes and values during 2019 were showing modest signs of recovery.
A long-running trade battle between Washington and Beijing appeared to have eased following a ceasefire in an escalating tit-for-tat row over import tariffs between the administrations of Donald Trump and Xi Jinping. But threats from Washington of renewed conflict over import tariffs has alarmed investors and dampened stock market values.