Official statistics for some of the world’s major trading economies further indicate the extent of the downturn in international trade caused by the COVID-19 pandemic. During 2020, none of the major economies has been spared.

China’s trade patterns have diverged from other economies. After falling in the early months of the pandemic, Chinese exports stabilized in Q2 2020 and rebounded strongly in Q3 2020, with year-over-year growth rates of almost 10 per cent. Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period. On the import side, the Chinese demand for imported products recovered following a decline in Q2 2020. Contrary to other major economies, Chinese imports stabilized in July and August then grew substantially in September.

Regional trade trends

The sharp and widespread decline in international trade in Q2 2020 has been similar for developing and developed countries. However, trade in developed countries appears to have fallen marginally faster, both in relation to imports and exports. Trade among developing countries (South-South) has been relatively more resilient with a decline of about 16 per cent in Q2 followed by a decline by 8 per cent in July.

No region has been spared from the decline in international trade in Q2 2020. However, trade in East Asia appears to have fared relatively better than in other regions. This trend is even more evident for the month of July. On the other hand, the sharpest decline has been for the West and South Asia region, where imports have dropped by 35 per cent, and exports by 41 per cent. As of July, the fall in trade remains significant in most regions.

Global trade at the sectoral level

Economic disruptions brought about by COVID-19 have affected some sectors significantly more than others. In Q2 2020, the value of global trade in the automotive and energy sectors was about half of what it was in Q2 2019. Trade also declined significantly in chemicals, machineries, metals and ores, and precision instruments. On the other hand, imports increased in office machinery and textiles and apparel. Such increases are linked to the COVID-19 pandemic as these sectors include home office equipment and protective equipment such as masks.

The data for July and August 2020 indicates similar patterns. The value of international trade in the energy and in the automotive sectors was still substantially below its levels of 2019. On the other hand, increases in demand of home office equipment and personal protective gear resulted in positive growth rates for trade in the communication equipment, office machineries, and textiles and apparel sectors.

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The ILO has also provided a variety of tools for support to its constituents (see ILO, 2020o for more details). The ILO–International Finance Corporation Better Work programme is monitoring the situation in its participating countries, and provides support to workers, factories and brands in addressing the crisis and protecting workers. The ILO has also convened forums for industry dialogue, discussion and exchange, as well as publishing a series of practical factory guides aimed at supporting business resilience through improved cash flow management, income and market diversification, workplace communication, and safety and efficiency in production (ILO, 2020p).

The ILO facilitated and supports the Call to Action, an international multi-stakeholder initiative which aims to spur industry-wide action to protect workers’ incomes, health and employment and support employers to survive during the COVID-19 crisis, and to work together to establish sustainable systems of social protection for a more just and resilient garment industry. The Call to Action is a positive example of global industry-wide collaboration, but it will need ongoing commitment and coordinated stakeholder action to be effective in achieving its intended objectives.

The decline in consumer demand for garments as well as the requirement to close workplaces to curb the spread of the virus, which resulted in a sharp decrease in garment production and employment, have charted a downward trajectory steeper than the one seen during the 2008-09 financial crisis. The depth of those declines and the speed and shape of the eventual recovery in the sector will likely not be (fully) visible until 2021 or 2022. Researchers will also require more time and data to measure whether government and industry interventions have been effective and sufficient to alleviate the crises.

Given the scale of the pandemic and impact to date, the global garment industry may in the coming years face a structural realignment, shaped in part by trends that were already disrupting the sector prior to 2020. Public calls for a rethink of garment supply chains, towards greater equality, inclusivity and sustainability, are becoming louder, while technological innovation is reshaping the possibilities for how and where production takes place, and the role the factory workforce plays in this process. This reconfiguration of the industry should also take into account long-standing challenges and address the need for investment in transportation and communication infrastructure, reliable power generation, education and skills development, all of which restrict the move of the industry into higher value-added products and services. More research is needed to fully understand the potential scenarios emerging as a result of the continued disruptions brought about by the pandemic.

It remains to be seen as to whether the post-pandemic global garment industry will undergo a fundamental restructuring to forge a new – and possibly more sustainable and resilient path – or whether it will revert back to a largely ‘business as usual’ scenario. Whichever trajectory the industry now takes, workers and enterprises will be on the frontline of its impact.

It is ultimately upon national governments, workers and employers to work together with other industry powerbrokers to find collective solutions for a human-centred future of the industry – a future that can deliver on its promise to be a transformative force for social and economic good across Asia and the Pacific.

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© International Labour Organization 2020

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March was an historic month — unfortunately, for many of the wrong reasons. The country is now in the midst of a national health emergency that has triggered adverse shocks to all dimensions of the economy and created significant challenges as the public has been asked to step back from economic activity.

The economic impacts are unlike any past pandemic, with many retailers and other businesses closed nationwide and many states in a lockdown where citizens are directed to stay at home. The equity markets have experienced historic selloffs and jobs have been profoundly impacted.

U.S. initial filings for unemployment benefits jumped to a shocking record high of 3.3 million in the week ending March 21. That compares with only 282,000 claims the week before and is nearly five times the previous record of 695,000 set in October 1982.

How quickly the country gets a handle on containing the virus will determine the degree of the impact on the economy and how soon businesses can reopen. NRF is not sugar-coating the outlook. We expect a severe contraction, and if the nation doesn’t get the virus under control, the fallout will be worse.

“Social distancing” and self-quarantining are now common in our day-to-day lives, and many of those who have not lost their jobs are working at home. With shelter-in-place or stay-at-home directives, retail foot traffic is nearly nonexistent. This is a serious time for retail firms as they try to sustain themselves, but the loss of income for both consumers and businesses is not distributed evenly.

Some “nonessential” retailers will see huge losses and many retail workers will lose their jobs. Yet other “essential” merchants will benefit from stable revenues and their workers will have secure jobs as they try to keep up with the demand for goods and services.

While recent market behavior is somewhat analogous to October/November 2008, what is happening is much different than what we experienced with the Great Recession of 2007-2009.  At that time, both the economy and the financial system were broken. There were huge amounts of excessive leverage, overbuilding of homes and structures, and millions of individuals lost their jobs as excesses were eradicated.

Fortunately, the economy entered the COVID-19 corridor with sound fundamentals. According to the Bureau of Economic Analysis, gross domestic product grew at an annualized pace of 2.1 percent during the fourth quarter of 2019. Sturdy employment gains, low inflation and elevated consumer confidence had provided the engine for growth for the longest economic expansion in history.

At this juncture, it is probable that we will experience a severe contraction at least in the second quarter, and GDP is about to go into a mandated nosedive. Upcoming government reports on economic data will likely show big, scary numbers and losses to the $22 trillion economy. When and what kind of bounceback and trajectory remains unsettled.

Nonetheless, we do not believe today’s situation presages a prolonged economic downturn. Once the pandemic is over, we hope we will find that there is nothing structurally wrong with the economy and that any deficiencies were solved by monetary and fiscal policies.

Any economic outlook is uncertain and difficult to quantify. The initial effect on retail sales will not be available until the Census Bureau releases March data on April 15. However, that data could be delayed or unreliable because retailers that closed during March were not available to complete the monthly survey of retail sales Census relies on to calculate the data.

It is not known how long this situation will last. Estimates of the impact of supply shocks, fewer jobs, reduced consumption and diminished wealth effect on the economy — or the ability of government stimulus efforts to offset these issues — all depend on the pace and scope of the infection and mortality rate. Even forecasts considering assumptions about these factors are highly unreliable and very subjective.

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“Retailers are still trying to minimize the impact of the trade war on consumers by bringing in as much merchandise as they can before each new round of tariffs takes effect and drives up prices,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “That’s the same pattern we’ve seen over the past year, but we’re very quickly going to be at the point where virtually all consumer goods will be subject to these taxes on American families. The upcoming October talks with China are an opportunity to put a stop to this escalation, repeal the tariffs that have been imposed and focus on growing the economy.”

New 15 percent tariffs on a wide range of consumer goods from China took effect at the beginning of this month and are scheduled to be expanded to additional goods on December 15 – covering a total of about $300 billion in imports. In addition, 25 percent tariffs on $250 billion worth of imports already imposed over the past year will increase to 30 percent on October 1.

“The tariff war with China closely resembles a poker game, with each country continually upping the ante,” Hackett Associates Founder Ben Hackett said. “As each side eyes its hand, things can only get worse.”
U.S. ports covered by Global Port Tracker handled 1.96 million Twenty-Foot Equivalent Units in July, the latest month for which after-the-fact numbers are available. That was up 9.1 percent from June and up 2.9 percent year-over-year. A TEU is one 20-foot-long cargo container or its equivalent.

Numbers were high again in August, which was estimated at 1.93 million TEU, up 1.8 percent year-over-year. September is forecast at 1.85 million, down 0.7 percent from last year; October at 1.92 million TEU, down 5.5 percent; November at 1.97 million TEU, up 8.8 percent, and December at 1.77 million TEU, down 9.8 percent.

Likely driven by the new tariffs scheduled for December, November’s 1.97 million TEU would be the highest monthly total since the record 2 million TEU seen in October 2018.

The first half of 2019 totaled 10.5 million TEU, up 2.1 percent over the first half of 2018, and 2019 is expected to see a new record of 21.9 million TEU. That would be up 0.7 percent from last year’s previous record of 21.8 million TEU, which rose 6.2 percent over 2017.

January 2020 is forecast at 1.81 million TEU, down 4.5 percent from January 2019.

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