World trade in goods remained sluggish in the first quarter of 2023 due to the ongoing war in Ukraine, high inflation and tightened monetary policies globally, but recent pickup in export orders points to an increase in demand for traded goods in the second quarter, according to the latest WTO Goods Trade Barometer issued on Wednesday.

“These results are broadly consistent with the WTO’s most recent trade forecast issued on April 5 which projects 1.7 per cent growth in world merchandise trade in 2023,” according to a report issued by the WTO. 

Mixed signals

However, with the barometer’s component indices giving “mixed signals”’ — automotive products index and export orders index moving above trend while indices representing container shipping, air freight and electronic components trade continuing to signal weakness — trade recovery may not be smooth, the report added.

The Goods Trade Barometer is a composite indicator for world trade and provides real-time information on the trajectory of merchandise trade relative to recent trends. Barometer values greater than 100 signal above-trend trade volume while values less than 100 suggest that goods trade has either fallen below trend or will do so in the near future.

Slump in trade

The volume of merchandise trade in the fourth quarter of 2022 was down 2.4 per cent compared to the previous quarter and 0.8 per cent 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 report said.

While the easing of pandemic controls in China from December 2022 boosted port traffic in the country, but this was outweighed by reduced vessel traffic in Europe, it noted.

“The combination of strong positive and negative indicators makes the short-term outlook less certain than usual,” it added.