Worldwide commodities prices dropped by 20% in March, the steepest decline in recorded history, while global trade values are expected to drop by 27% in the second quarter of this year, according to new UN data.

In a detailed statistical report on the likely impact of the Covid-19 pandemic, the UN Conference on Trade and Development (UNCTAD) says its findings are “unprecedented”.

“We are witnessing data points and inflections in trends that would have been unimaginable only a few months ago,” it says. “New statistical records are being set on an almost weekly basis.”

The total value of global goods trade was down 3% in the first quarter of the year, but that slowdown is expected to accelerate in Q2 due to a combination of factors including emergency lockdown measures, a slump in air cargo traffic and a slowdown in manufacturing.

The findings for commodities pricing are particularly stark. UNCTAD’s free market commodity price index, which measures primary commodity prices of exports from developing economies, shows an overall drop of 1.2% in January, 8.5% in February and a “whopping” 20.4% in March.

Plummeting fuel prices were the main driver of the steep decline, plunging 33.2% in March, while prices of minerals, ores, metals, food and agricultural raw materials tumbled by less than 4%,” UNCTAD says.

“The more than 20% fall in commodity prices in March was a record in the history of the [price index]. By comparison, during the global financial crisis of 2008, the maximum month-on-month decrease was 18.6%.”

During that crisis, the price drop lasted around six months. In this case, the report says the duration and depth of the current downward trend remains too uncertain to predict.

Rebecca Harding, an independent economist and chief executive of Coriolis Technologies, says shipping data could give an indication of how steep the decline in overall trade volumes is likely to be in the coming months.

“Around 80% of the world’s trade is carried by sea and since the beginning of the year there were over 430 so-called ‘blank sailings’, where shipping lines cancelled their journey,” she says.

“This number is expected to increase into May and for comparison, it’s now nearly twice the level that it was during the 2008 financial crisis over a shorter period of time. In other words, the numbers in the coming months will not look pretty.”

One of the major impacts of Covid-19 has been a global slowdown in manufacturing, which the UNCTAD report says was an issue even prior to the outbreak – particularly in industrialised countries.

Though China still showed high quarterly growth rates last year, its production in the first two months of this year showed a sharp reduction of output – attributed to a combination of Chinese New Year followed by lockdown measures in Wuhan and elsewhere.

In North America, Europe and East Asia, UNCTAD says the direct impacts of Covid-19 on manufacturing cannot yet be measured as most containment measures were started in March.

“Nevertheless, these countries started the year 2020 with further decreases of manufacturing production which will be reinforced by largely Covid-19 measures made by the countries so far,” it says.

“The aggregate for the world manufacturing production also shows a sharp decline caused mainly by [the] large share of China in global manufacturing. As other countries will be included, global manufacturing growth is expected to drop further.”

UNCTAD has already forecast a potential drop in global GDP of US$1-2tn over the course of this year, as a result of the outbreak. In that report, published in March, it said a “doomsday scenario” would be brought about if lockdown measures are sustained for several months and oil prices decline further.

In terms of bank exposure to emerging and developing markets, the report says the stability of credit lines vary widely. Several factors, including the maturity of any lending and whether claims are in foreign or local currencies, influence “how rapidly the stock of credit can contract following a shock”.

“At the same time, borrowers are more likely to need cash during such periods, and thus draw on existing credit lines, resulting in an expansion of the stock of claims,” it says.

Corporate borrowers in developing markets are expecting to draw on credit lines to secure working capital, UNCTAD adds, resulting in an expansionary effect on global banking credit.