Downturn in EU27 tropical imports may be less severe than forecast

The downturn in EU imports of wood and wood furniture products during the initial period of the COVID-19 pandemic may be less severe than first forecast. As expected, EU27 (i.e. excluding the UK) tropical wood and wood furniture product imports fell sharply in May in response to supply side problems and the lockdown measures in most of the main EU markets, losing around one third of value against the five-year average for the month.

However, imports were already recovering in June, a month which in a more typical year is when imports tend to slow before the summer holiday period.

Imports during June were only around 20% below the 5- year average for that month. In total, EU27 imports of all tropical wood and wood furniture products in the first half of 2020 were US$1.49 billion, 17% less than the same period in 2019.

There is a reasonable chance that, if the recovery continues over the summer months, overall imports of tropical wood and wood furniture in 2020 will not be too far below 2019 or the five-year average.

This does assume, however, that there is no significant uptick in COVID-19 cases in the EU with the onset of winter leading to widespread resumption of lockdown measures. As things stand, there is a still concern in the EU about the possibility of a second wave.

More positively, anecdotal reports suggest that the DIY sector in the EU remained quite buoyant in some countries throughout the lockdown months with many people taking the opportunity to carry out home improvement work. In those EU countries with less stringent lockdowns, such as the Netherlands and Sweden, commercial construction and some manufacturing activity also continued, at a slower pace but without interruption.

Another reason for optimism is the agreement reached between the leaders of the 27 EU Member States at a summit on 21st July 2020 on a comprehensive fiscal stimulus package worth €1.85 trillion over the next seven years.

The package consists of a €1.1 trillion budget, 30% of which will be spent on tackling climate change, and a further €750 billion in grants and loans, all of which must be tied to meeting the bloc’s carbon emission-cutting targets. This has potential to create new market opportunities for timber products in the EU.

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