The value of global trade fell 2.8 per cent between February and March as Russia’s invasion of Ukraine led to a sharp drop in container ship traffic from the two countries, according to the Kiel Institute for the World Economy.
The data from the German research body are the first to indicate how much the conflict in Ukraine and extensive sanctions imposed on Russia by the west have hit global trade since the invasion started on February 24.
The biggest impact was on trade with Russia, as the value of imports into the country fell 9.7 per cent in March from the previous month, while exports fell 5 per cent, according to the Kiel Institute. Its indicator tracks shipping data from 500 ports in real time, seasonally adjusting the value of exports and imports, to offer a measure of trading activity.
“Real distortions caused by Russia’s invasion of Ukraine and the sanctions imposed by the west, as well as a high level of uncertainty among companies with relations to Russia, are noticeably setting back March trade,” said Vincent Stamer, head of Kiel Trade Indicator.
Shipping container traffic halved in the past month at St Petersburg, Vladivostok and Novorossiysk, Russia’s three busiest container ports, because of the sanctions imposed on the country and the withdrawal of many western brands, the institute said. Ukraine’s main port at Odesa on the Black Sea has been “practically cut off from international maritime trade”, it added.
The war in Ukraine had a chilling effect on EU trade, reducing exports from the bloc by 5.6 per cent in March and imports by 3.4 per cent. The impact on the US was milder, with its exports falling 3.4 per cent and imports dipping 0.6 per cent.
By contrast, the impact on China was negligible, as its exports fell 0.9 per cent last month, while imports grew 0.9 per cent. Beijing has been more supportive of Russia’s invasion of Ukraine than the west and has not backed international sanctions on Moscow.
China’s zero-covid lockdowns have so far had little impact on port traffic in Shanghai and other cities, but they did increase container ship congestion, the institute said. About 12 per cent of all goods shipped worldwide were stuck on stationary ships – a figure surpassed only for two months last year.
The figures tie in with separate data compiled monthly by JPMorgan and rating company S&P, which showed the global exports purchasing managers’ index dropping to 48 in March, down from 51 the previous month and the lowest since July 2020, when many countries had stringent coronavirus restrictions in place.
This was also below the 50 mark, which indicates a majority of businesses reporting a contraction in exports compared with the previous month.
The downturn in global manufacturing exports was geographically widespread, the PMIs showed, with two-thirds of the countries surveyed reporting a contraction.
The war has disrupted supplies of staple resources and commodities such as maize, wheat, potash, neon gas, nickel and palladium from Russia and Ukraine, two of the world’s biggest producers of these commodities, pushing up energy and food prices and crimping production at several car and truckmakers.
The pressure on trade could increase as the US and EU are preparing a new round of sanctions against Russia in response to allegations of atrocities committed by the Russian military in Ukraine, including in towns near Kyiv.
The EU plans to target Russian coal importswiden its restrictions on the country’s banking sector and impose export bans worth € 10bn on areas including quantum computers and advanced semiconductors and bans worth € 5.5bn on products including wood, cement, seafood and liquor.
Washington, which is co-ordinating its action against Moscow with other G7 and EU countries, is poised to ban new investment in Russia while increasing sanctions on the country’s financial institutions, state-owned enterprises and government officials.
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