Global merchandise trade is set to drop "precipitously" in the first half of 2020, according to the quarterly Goods Trade Barometer published by the World Trade Organization (WTO) on Wednesday.
The current reading of the barometer fell to 87.6 in the second quarter, compared to 95.5 in February, which indicates a very sharp decline in global goods trade.
The reading is recorded as the lowest since July 2016 when the index was first published.
The baseline reading is 100; a reading of more than 100 indicates growth above the trend, while less than 100 indicates growth below the trend.
"The barometer captures the initial phases of the Covid-19 outbreak and shows no signs of the trade slump bottoming out yet," the WTO said.
It also said the drop is consistent with the WTO's trade forecast, which projected a decline in merchandise trade between 13 percent and 32 percent this year.
The trade barometer shows real-time information on the direction of world trade concerning recent trends.
The overall Goods Trade Barometer index combines information on several component indices representing trade-related variables such as export orders, international air freight, container shipping, automobile sales and production, electronic components, and agricultural raw materials and composite in a single index.
The current barometer shows that all the components are well below the trend growth. Moreover, compared to February 2020, all indices of the components except raw materials have fallen.
Among all the components, the automotive products index is the weakest of all, with a 79.7 reading. Automobile production and sales have collapsed since the outbreak of Covid-19.
The trade flow has declined globally. That reflects in the export orders index, which is only 83.3. This means, for a short period, weak trade growth will persist. As a result, other related indexes, including air freight and container shipping, are below trend-growth. The current index of air freight is 88.0 and container shipping is 88.5.
Although the agricultural raw material and electronic components are stable, these are still below trend with indexes at 95.7 and 94.0, respectively.