Economics China's Trade Outlook: What does UBS Evidence Lab Traffic Congestion Data Tell us?

China's March exports declined 6.6% year over year; imports stayed largely flat year over year, better than expected. Weaker global demand could lead to >20% year over year decline in export demand in Q2.

14 Apr 2020

March exports and imports both improved

Source: CEIC, UBS estimates

March trade better than expected

China's March exports declined by 6.6% year over year and imports stayed largely flat year over year, better than expected. Exports have likely been helped by the clearing of some earlier backlog orders while the recent sharp drop in global activities has not yet been reflected. Work resumption has likely also helped to boost imports, while imports of electronics components and medical equipment were particularly strong.

Plummeting global traffic points to sharp decline in export demand

UBS Evidence Lab global traffic congestion data suggest that urban traffic and related activities have fallen sharply in recent weeks, similar to what happened in China in February. We think retail sales in the US and major European economies could drop by 20% year over year or more in the period that strict mobility restrictions are in place, leading to an even greater fall in imports, including from China. We see China's exports dropping by at least 20% year over year in Q2, with the fall in April likely greater. China's import volume is likely to fare better due to a rebound in domestic demand, though likely supply chain disruptions and lower commodity prices will keep imports weak.

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