Global Trade: It was the best of times…it was the worst of times
By Alice Ancona, Senior Vice President & COO, World Trade Center Miami
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity…”
A Tale of Two Cities, by Charles Dickens.
Let’s begin by getting the bad news out of the way. Reports on the global trade slump are certainly dire. The IMF stated that it expects a global GDP contraction of -3% for 2020 and that prediction may need to further be revised downward. To put it into context, the 2008/09 global financial crisis caused a decrease in global activity by -.01%.
The U.N. reports that merchandise trade was down -3% from the last quarter in 2019 and it estimates that that in the second quarter it will be down by approximately -27%.
The charts below are pretty eye opening indeed. Both advanced and emerging markets are experiencing recession, something not seen since the Great Depression.
Annual percent change in GDP:
Here in Florida, COVID-19 has changed some of our trading partners. Now that Q1 data is available, we can look at what happened the first three months of the year. So far, the numbers are not terrible. In Q1 there was a -2.09% decline in value in Florida origin exports and a -.60% decline in imports. Certain commodities have done well, others have been hard hit. We do expect to see a greater decline in Q2. Be sure to check back for updates on data.
Florida origin exports that have been hard hit include: electrical equipment, fertilizers and seafood. Commodities that experienced export growth include: aviation and aerospace, pharmaceuticals, wood, and paper products to name a few.
On the import side, some commodities where we saw growth include: organic chemicals, fruits and vegetables, and cooper. Commodities which experienced a decline include: auto and auto parts, furniture, and apparel. No surprise as many retail establishments has been closed due to COVID-19.
Florida’s trade partners have also been shifting. See below for Q1 rankings and percentage changes in trade.
Top Origin Export Destinations:
Top Import Sources:
On the “good news” side of things, we do have to look forward to the recent announcement of the formal launch of trade agreement negotiations between the U.S. and the U.K. If you notice on the Florida import/export data above, trade with the U.K. grew significantly in Q1. While some of this growth may be COVID-19, it presents us with an opportunity to build on. The U.K. is an important market for both trade and investment. There are more than 650 U.K. companies based in Florida.
Additionally, the United States–Mexico–Canada Agreement (USMCA) will enter into force on July 1st. This Agreement contains significant improvements to rules of origin, market access, services trade and e-commerce that will create new opportunities for Florida.
More to come from the World Trade Center Miami on opportunities the U.S.-U.K. FTA and USMCA can offer for your company in the coming weeks.