WTO Goods Barometer
Rises above Trend but Electronic Components Falls
Global
goods trade has continued to recover in the third quarter of 2024 after demand for
traded goods stalled in 2023 amid high inflation and rising interest rates, according
to the latest WTO Goods Trade Barometer. Despite the positive signal from the barometer
index, the outlook for trade remains highly uncertain due to rising geopolitical
tensions, ongoing regional conflicts, shifting monetary policy in advanced economies
and weakening export orders.
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
latest reading of 103.0 for the barometer index (represented by the blue line above)
is above both the quarterly trade volume index (represented by the black line) and
the baseline value of 100 for both indices, suggesting 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 final quarter of 2022, the volume of world merchandise
trade started to turn up in the fourth quarter of 2023 and gained momentum in the
first quarter of 2024. In 2024 Q1, the last period for which data is available,
trade was up 1.0% quarter-on-quarter and 1.4% year-on-year.
Quarter-on-quarter
growth in the last two quarters averaged 0.7%, which is equivalent to 2.7% on an
annualized basis. This is quite close to the WTO's most recent forecast of April
2024, which predicted a 2.6% increase in world merchandise trade volume in 2024.
Recent data in value terms show weaker than expected trade growth in Europe and
stronger than expected growth in other regions. As a result, the WTO's regional
projections may need to be adjusted in the next WTO trade forecast update, which
will be issued in mid-October.
All
of the barometer's component indices are currently on or above trend, with the notable
exception of the electronic components index (95.4), which is below trend and falling.
Component indices for automotive products (103.3), container shipping (104.3) and
air freight (107.1) are all firmly above trend, although the automotive products
index appears to have lost momentum recently. New export orders (101.2), usually
the barometer's most predictive component, is marginally positive but has turned
down, which could be a cause for concern going forward. The index of raw materials
(99.3) is nearly on trend but has declined sharply over the last three months.