Global goods trade continued to recover in the third quarter after demand for traded goods stalled in 2023 amid high inflation and rising interest rates, according to the latest WTO Goods Trade Barometer.
But 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 WTO warns.
The barometer is a composite leading indicator of 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 values below 100 suggest that goods trade has either fallen below trend or will do so in the near future.
The latest reading of 103.0 is above both the quarterly trade volume index 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 annualised basis. This is quite close to the WTO's most recent forecast of April 2024, which predicted a 2.6% volume increase in 2024. Recent data in value terms show weaker-than-expected trade growth in Europe and stronger-than-expected growth in other regions.
All 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 airfreight (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 WTO says. The index of raw materials (99.3) is nearly on trend but has declined sharply over the last three months.
The full Goods Trade Barometer is available here.
