Global merchandise trade has improved slightly but growth is still expected to remain below average going into the last quarter of the year, according to the latest Goods Trade Barometer reading of the World Trade Organization (WTO).
The indicator’s reading of 96.6 for September marks a slight improvement compared to the 95.7 registered in August, but it remains well below the index’s baseline value of 100, signalling below average growth, WTO said in a release November 18.
Some components of the barometer have stabilized since the last reading in August, while others remain on a downward trajectory, reflecting heightened trade tensions and rising tariffs in key sectors.
Indices for export orders (97.5), automotive products (99.8), and container shipping (100.8) have firmed up into on-trend territory.
However, the indices for international air freight (93.0), electronic components (88.2), and raw materials (91.4) have all deteriorated further below trend.
“Electronic components trade was weakest of all, possibly reflecting recent tariff hikes affecting the sector,” the report noted.
Official data confirm the loss of momentum in goods trade foreseen by the Goods Trade Barometer earlier this year. According to the latest WTO quarterly trade volume statistics, merchandise trade rose by only 0.2% year-on-year in the second quarter of 2019, compared with 3.5% in the same quarter of last year.
“The latest barometer reading suggests that goods trade will likely remain below trend in the third quarter and into the fourth quarter,” said the report.
In September, WTO economists downgraded their trade growth expectations for 2019 to 1.2%, down from the 2.6% forecast in April. They attributed this substantial deceleration to slowing economic growth, increased tariffs, Brexit-related uncertainty, and the shifting monetary policy stance in developed economies.
The Goods Trade Barometer provides “real time” information on the trajectory of world merchandise trade volumes relative to recent trends. Readings of 100 indicate growth in line with medium-term trends; readings greater than 100 suggest above-trend growth, while those below 100 indicate below-trend growth.
Image courtesy of WTO
