WTO goods trade barometer flags idling global trade growth

WTO goods trade barometer flags idling global trade growth

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WTO goods trade barometer flags idling global trade growth
The latest WTO Goods Trade Barometer, issued on August 23, was steady but below the recent trend line for merchandise trade. Image from the WTO.
  • Merchandise trade growth continued in Q1 2022, but at a slower pace than in first quarter
  • The latest WTO Goods Trade Barometer was steady but, at 100.0, it was below the recent trend line for merchandise trade
  • The gauge shows trade growth may still slow but stay positive in official Q2 statistics, with trade stymied by the Ukraine conflict in and buoyed by the lifting of COVID-19 lockdowns in China

Global goods trade continued to grow in the second quarter of 2022, but at a slower pace than in first quarter and should remain weak this second half, the World Trade Organization’s gauge for trading merchandise indicates.

The latest WTO Goods Trade Barometer, issued on August 23, was steady but below the recent trend line for merchandise trade.

The composite leading indicator for world trade, which provides real-time data on the trajectory of merchandise trade relative to recent trends, was at 100.0 at the latest reading.

The reading coincides exactly with the baseline value of the index, indicating on-trend trade expansion, the UN agency said. But the overall barometer remains below a companion index representing actual merchandise trade volumes.

This suggests year-on-year trade growth may slow further but remain positive when official Q2 statistics become available, with trade simultaneously weighed down by the conflict in Ukraine and buoyed by the lifting of COVID-19 lockdowns in China, WTO said.

The volume of world merchandise trade has plateaued with year‐on‐year growth slowing to 3.2% the first quarter of 2022, down from 5.7% in fourth quarter last year.

The first quarter slowdown only partly reflected the impact of the Ukraine war, which began with Russia’s invasion in late February. Lockdowns in China also weighed heavily on trade in the first quarter.  

WTO said the components of the goods barometer are a mixed bag, with most indices showing on-trend or below-trend growth. The forward-looking export orders index (100.1) is on trend but has turned downwards.

The automotive products index (99.0) is only slightly below trend but has lost its upward momentum. Indices for air freight (96.9) and electronic components (95.6) are below trend and pointing down, while the raw materials index (101.0) has recently risen slightly above trend.

The main exception is the container shipping index (103.2), which has risen firmly above trend as shipments through Chinese ports have increased with the easing of COVID-19 restrictions.

WTO said the latest barometer reading is consistent with its most recent trade forecast in April of 3.0% growth in the volume of world merchandise trade in 2022.

Uncertainty surrounding the forecast has increased due to the conflict in Ukraine, rising inflationary pressures, and expected monetary policy tightening in advanced economies, the trade body said.

The WTO said a revised forecast will be issued in early October .

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