Europe says its trade with world would slump by $963bn this year

Bloomberg

The European Union (EU) said its trade with the rest of the world would slump this year by as much as 868 billion euros ($963 billion), or more than 10%, in a gloomier updated forecast that offers fresh evidence of the global economic damage caused by the coronavirus.
EU exports of goods and services will fall by 282 billion euros to 470 billion euros, or 9% to 15%, while imports of both will decline by 313 billion euros to 398 billion euros, or 11% to 14%, the European Commission said.
The new forecast is based on a projection by the commission, the 27-nation EU’s executive arm in Brussels, that global trade will drop 10% to 16% this year. The World Trade Organisation (WTO) predicted in early April that global merchandise commerce would decline as much as 32% this year.
In an initial projection in mid-April of the pandemic’s impact, the commission said the bloc’s trade with the rest of the world would fall by 525 billion euros this year. That outlook foresaw EU exports of goods and services dropping 9.2% and imports declining 8.8%.

Europeans not very hopeful about economy
Europe is mostly open for business again after months of lockdown. Green shoots are emerging from the economic rubble, with indicators of activity and confidence inching up.
Yet a closer look at European Commission’s sentiment survey for May shows companies and people are glum about the economy, suggesting any recovery will be drawn out and slow.
People are finally able to leave their homes for more than just grocery shopping, but many don’t feel it’s time for major purchases of things like furniture or electrical goods. Savings figures suggest there’s pent-up demand, but right now big spending doesn’t look like it’s a priority.
That’s fuelling concern among economists that the lockdown may have caused a shock to consumption that could inflict long-term economic damage.
It’s no surprise people are shy about purchases with jobless claims rising and companies saying they won’t be hiring for now. When you add to that the many firms that will only reopen partly due to social distancing rules the job market looks grim.
Construction and manufacturing are particularly downbeat: As shuttered factories try to return to normal, they face meager order books which could further impact employment and consumption.
Selling abroad isn’t much of an option either as closed or semi-closed borders and persistent fears about a second wave of virus leave industry managers deeply pessimistic about exports.
With demand in question, companies aren’t that optimistic about raising prices. Selling price expectations remain very muted across sectors and economies. If that hits company profits, that’s another threat to jobs.
Governments are trying to dispel some of these fears and support their economies with massive spending programs. The European Union this week unveiled an unprecedented $825 billion stimulus proposal, and individual nations are also funnelling money into support. That will be followed by stimulus in many countries as governments try to revive economies after keeping them afloat over the past two months.