Air Freight News

Coronavirus pain set to show up next in China’s trade data

China’s trade likely plunged in January and February on the combined effects of the extended Lunar New Year holiday and the worsening coronavirus outbreak, highlighting the impact on supply chains that continues to ripple through the global economy.

Exports and imports are forecast to have slumped in the period, with shipments out of China dropping by about a fifth, according to a Bloomberg survey. The release on Saturday will be the first time the government has combined the data for the first two months of the year, an attempt to smooth out the usual volatility from the Lunar New Year break.

However this year is anything but usual, as factories remain far below capacity and consumers stay at home due to government restrictions and fear of the disease. The shutdowns pushed the official purchasing managers’ index in February to the lowest level on record, and more pain could be in store if demand in developed economies craters due to outbreaks there.

“This is the second round effect we are worried about,” said Raymond Yeung, chief China economist at Australia & New Zealand Banking Group Ltd in Hong Kong. “Now, epidemiologists instead of economists are more capable of predicting China’s economic outlook.”

The disruption may also jeopardize China’s ability to meet its commitments to the U.S under the terms of the trade deal signed in January. China agreed to increase its imports of U.S. goods and services by $76.7 billion over the level in 2017 in the first year of the deal, and then by $123.3 billion in the second year, increasing imports by a total $200 billion.

Economists continue to downgrade their forecasts for China’s economy, reflecting in part slow progress in getting its industrial machine back to pre-virus levels. Nomura Holdings Inc. is the latest to change, cutting its growth forecast for the first quarter to 0%.

What Bloomberg’s Economists Say…

“China’s trade data for the first two months of 2020—due on Saturday—will be the first set of comprehensive hard data on the impact of the coronavirus on the economy. It won’t be pretty. Exports and imports likely nosedived. With the virus epicenter in China, this would reflect a hobbled domestic economy more than conditions elsewhere—and point to the potential for spillover to trading partners.”

—Chang Shu, chief Asia economist

The twin supply-demand shocks around the world are prompting renewed calls for finance ministries and central banks to pump in stimulus. With China apparently getting on top of its own outbreak, a further escalation of government support to the economy could fire local demand and ease the pain being felt elsewhere.

“China is the biggest market for many companies around the world,” said Gai Xinzhe, a senior analyst at Sino-Ocean Capital in Beijing. “If China rolls out robust measures to boost infrastructure, property, 5G network construction, auto consumption and so forth, it will give a push to the global economy, and in return, alleviate the pressure on external demand.”

Bloomberg
Bloomberg

{afn_job_title}

© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

Similar Stories

https://www.ajot.com/images/uploads/article/methamphetamine.jpg
CBP intercepts over $30 million in methamphetamine at the Pharr International Bridge
View Article
https://www.ajot.com/images/uploads/article/DREW_%28new%29.JPG
WTCA Forum 2024 in New York underscores importance of international collaboration
View Article
ACD celebrates 2024 Annual Meeting in La Quinta, California

Today, the Alliance for Chemical Distribution (ACD) welcomed 666 members and industry leaders for its highly anticipated 2024 Annual Meeting held in La Quinta, California.

View Article
Holiday spending still on track for steady growth amid ‘mixed signals’ in recent jobs and GDP data

The National Retail Federation still expects steady sales growth for the winter holiday season despite contradictions in the latest economic indicators, NRF Chief Economist Jack Kleinhenz said today.

View Article
Trump Presidency will reignite US-China trade war and threaten a spike in ocean container shipping markets / Xeneta

Donald Trump’s victory in the US Presidential Election is ‘a step in the wrong direction’ for international trade as importers fear another spike in ocean container shipping freight rates.

View Article
https://www.ajot.com/images/uploads/article/Census_Bureau.png
U.S. international trade in goods and services, September 2024
View Article