WTO Goods Trade Barometer. Global trade recovers from Covid-19, hits a record high

Spelling good news for Indian exporters, the WTO’s Goods Trade Barometer has indicated that the global trade in goods is continuing its robust recovery from the shock of the Covid-19 pandemic, with an increase in indices for air freight, container shipping, raw materials and auto.

The barometer, which is an indicator providing real-time information on the trajectory of merchandise trade, hit a record high in its latest reading issued on Wednesday. The WTO, however, cautioned that Covid-19 continues to pose the greatest threat to the outlook for trade, as new waves of infection could easily undermine the recovery.

The latest reading of 110.4, which is over 10 points above the baseline value of 100 for the index, is up more than 20 points year-on-year, reflecting the strength of the ongoing recovery and the depth of the pandemic-induced shock last year, said the WTO report.

On the flip side, data suggest that the trade recovery may be slowing as the barometer index has started to rise at a decreasing rate. The forward-looking export orders index (109.3) has also turned down, suggesting that upward momentum in trade may have peaked.

Export target

India has set an ambitious export target of $ 400 billion for 2021-22 as opposed to goods exports worth $290 billion in the previous fiscal. While exports from the country performed well in the April-July 2021-22 period, posting an increase of 73.5 per cent to $130.53 billion as the country recovered from Covid disruptions, the flow of global orders must be maintained if the country is to meet its high growth target.

The latest barometer results are consistent with the WTO’s most recent forecast of 8 per cent growth in world merchandise trade volume in 2021 following a 5.3 per cent drop in 2020, the report highlighted. The volume of merchandise trade was up 5.7 per cent year-on-year in the first quarter of 2021, the largest increase since a 5.8 per cent rise in third quarter of 2011, said the report. The recovery has been marked by regional disparities, with North America, Europe and Asia regaining lost ground and other regions lagging behind.

The latest barometer reading suggests that goods trade will see an even bigger year-on-year increase in the second quarter (of the calendar year), with growth moderating thereafter. The pace of recovery could be restrained by supply chain disruptions – the semiconductor shortage that has recently hampered vehicle production.

Indices for air freight (114), container shipping (110.8) and raw materials (104.7) were rising, indicating faster than average growth in these sectors.

The automotive products index (106.6) also rose despite the fact that car production and sales fell in July in some countries due to the shortage of semiconductors. This shortage is also reflected in a small drop in the index for electronic components (112.4), added the report.

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