Global trade seen rebounding faster now than post-Lehman

Global trade is on course to recover more quickly from the coronavirus pandemic than after the 2008 financial crisis, according to Germany’s Kiel Institute for the World Economy.

Shipping volumes are already back at levels that took more than a year to reach following the collapse of Lehman Brothers Holdings Inc., hinting at a V-shaped recovery, the institution’s President Gabriel Felbermayr said.

Trade has seen a “deep slump and a quick rebound,” he said. “The current situation is significantly better” than a decade ago.

The pandemic has pushed the global economy into what may be its deepest slump since the Great Depression. The initial rebound reflects the lifting of severe restrictions to contain the virus, and policy makers have warned against premature optimism that the worst has passed.

The World Trade Organization said earlier this month that projections for a strong, V-shaped trade rebound in 2021 might be “overly optimistic.”

Yet others—including the Kiel Institute—are taking a more confident stance. On Monday, International Monetary Fund Managing Director Kristalina Georgieva pointed to a “revival of trade.”

The government of export-heavyweight Germany expects the economic fallout from the coronavirus to be smaller than expected this year, according to a person familiar with updated forecasts to be published later on Tuesday.

The Kiel Institute argued container shipping activity in key areas supported its conclusion, with ship movements in the Americas, Asia and Europe normalizing. Freight capacity was back at levels that would be expected in late August—even without a crisis.