The World Trade Organization (WTO) published its Goods Trade Barometer on Wednesday morning, showing a steep decline in 1H20 as the COVID-19 pandemic disrupted the global economy.
"The index currently stands at 87.6, far below the baseline value of 100, suggesting a sharp contraction in world trade extending into the second quarter," the new report showed.
"This is the lowest value on record since the indicator was launched in July 2016."
Most importantly, the WTO warned: "the current reading captures the initial phases of the COVID-19 outbreak, and shows no sign of the trade decline bottoming out yet."
The current reading of the Goods Trade Barometer suggests world merchandise trade could plunge between 13% and 32% in 2020, which is all dependent on if there's a second virus wave.
WTO trade data show the volume of world merchandise trade contracted by 0.1% in 2019, the first decline since the 2009 GFC. The downturn in the global economy started in late 2017, mostly because marginal productivity of debt was quickly depleted across major economies and a trade war between the US and China that quickly erupted.
For more color on collapsing world trade, A.P. Moller-Maersk A/S, the world's largest container line, warned last week that global trade would continue to falter with volumes declining by at least a quarter in 2Q20. The shipper dashed all hope that a V-shaped recovery will be seen in the back half of the year, instead suggesting a U-shaped recovery is more plausible.
Meanwhile, this week, BofA's latest Fund Manager Survey, which polled 223 participants with $651BN in AUM, showed the vast majority of financial professionals remain incredibly bearish on the global economy. Respondents do not expect global manufacturing PMI to rise back above 50 until 4Q20.
MSCI World has soared 32% in the last 41 trading sessions on V-shaped recovery and vaccine hopes.
While world stocks are pushing the narrative that the end of the pandemic is near and it's time to celebrate about economic revivals -- that is far from the case, and the latest trade data from WTO suggest the bottom is not in.