Global trade continues to face choppy waters due to rising geopolitical tensions, ongoing regional conflicts, shifting monetary policies in industrialized economies like the United States and falling export orders, according to the World Trade Organization’s trade barometer released last week.
On a more positive note is a recovery in goods trade during the third quarter of 2024 after demand for traded goods stalled in 2023 when the US Federal Reserve hiked interest rates to fight inflation, the trade barometer suggested.
Issued ahead of the WTO’s annual Public Forum – a major public relations event taking place next week – the goods trade barometer put the latest index value at 103.
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, the WTO suggested.
In the first quarter of 2024, the last period for which data is available, trade was up 1 percent quarter-on-quarter and 1.4 percent year-on-year, while quarter-on-quarter growth in the last two quarters averaged 0.7 percent, which is equivalent to 2.7 percent on an annualized basis, the WTO economists reported.
They noted that this is quite close to the WTO’s most recent forecast of April 2024, which predicted a 2.6 percent increase in world merchandise trade volume in 2024.
However, the recent data in value terms show weaker than expected growth projections 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.
According to the latest release of data, “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.”
Further, “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.”
In a similar vein, the index of raw materials (99.3) is nearly on trend but has declined sharply over the last three months.
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