WTO Goods Barometer shows steep falls in Transport, Electronic
Components, Auto up
Global goods trade remained
depressed in the first quarter of 2023, but forward-looking indicators point to
a possible turnaround in the second quarter according to the latest WTO Goods Trade
Barometer issued on 31 May.
The value of the barometer index
rose to 95.6 in the latest reading — up from 92.2 in March — but remained well below
the baseline value of 100, suggesting a below-trend stabilization and the beginnings
of an upturn in merchandise trade volumes. Mixed signals in the barometer's component
indices nevertheless suggest that the road to trade recovery may be bumpy.
The Goods Trade Barometer is
a composite leading indicator for world trade, providing real-time information on
the trajectory of merchandise trade relative to recent trends. Barometer values
greater than 100 are associated with above-trend trade volumes while barometer values
less than 100 suggest that goods trade has either fallen below trend or will do
so in the near future
The volume of merchandise trade
in the fourth quarter of 2022 was down 2.4% compared to the previous quarter and
0.8% compared to the same period in the previous year. The Q4 slump was driven by
several related factors, including the ongoing war in Ukraine, stubbornly high inflation
in advanced economies, and tighter monetary policy globally.
The easing of pandemic controls
in China starting in December 2022 appears to have boosted port traffic in the country,
but this was outweighed by reduced vessel traffic in Europe. Preliminary data suggest
that trade remained depressed in Q1 of 2023, but the recent pickup in export orders
points to an increase in demand for traded goods in the second quarter. These results
are broadly consistent with the WTO's most recent trade forecast issued on 5 April,
which projects 1.7% growth in world merchandise trade in 2023.
The barometer's component indices
are currently mixed. The automotive products index (110.8) has risen firmly above
trend on the back of strong sales in the United States and Europe. The highly predictive
export orders index (102.7) has also returned above trend after a dip following
the outbreak of war in Ukraine. In contrast, the indices representing container
shipping (89.4), air freight (93.5) and electronic components trade (85.2) all continue
to signal weakness. The index of raw materials trade (99.0), meanwhile, finished
just below trend. The combination of strong positive and negative indicators makes
the short-term outlook less certain than usual.