WTO barometer signals uptick in global trade, but risks looming
Global goods trade is rebounding in the third quarter of 2024, following a stall in demand for traded goods in 2023 amid high inflation and increasing interest rates, according to the latest World Trade Organisation (WTO) Goods Trade Barometer. Despite the positive signal from the barometer index, a highly uncertain outlook for trade looms driven by growing geopolitical tensions, ongoing regional conflicts, shifting monetary policy in advanced economies, and weakening export orders.
The barometer, a composite leading indicator of world trade, is designed to provide real-time information on the trajectory of merchandise trade relative to recent trends. Barometer values above 100 indicate that global trade is outperforming historical trends, while values below 100 suggest that trade is either lagging behind or will do so in the near future.
The latest reading of 103.0 for the barometer index (represented by the blue line in the graph) is above both the quarterly trade volume index (the black line) and the baseline value of 100 for both indices, signalling that merchandise trade volume growth should remain positive in the second and third quarters of 2024 once official statistics for these periods become available.
After remaining flat since the last quarter of 2022, the volume of world merchandise trade started to pick up in the final quarter of 2023 and gained momentum in the first quarter of 2024. Trade volume increased by 1.0 per cent quarter-on-quarter (QoQ) and 1.4 per cent year-on-year (YoY) in the first quarter of 2024. The average quarterly growth over the past two quarters is 0.7 per cent, aligning closely with the WTO’s April 2024 forecast of a 2.6 per cent annual increase in trade volume.
The barometer’s component indices reflect mixed trends: the automotive products index stands at 103.3, the container shipping index at 104.3, and the air freight index at 107.1, all above trend. In contrast, the electronic components index is below trend at 95.4. New export orders are marginally positive at 101.2 but have begun to decline, while the raw materials index is nearly on trend at 99.3 but has sharply decreased.
The WTO may revise its regional trade projections in the next forecast update scheduled for mid-October, following weaker-than-expected growth in Europe and stronger growth in other regions. The statement came during the release of the barometer data in early September 2024.
Attribution: WTO Goods Trade Barometer
Subediting: Y.Yasser
