Recovery in global trade in goods led by auto, electronics: WTO Trade Barometer

The volume of global trade in goods is recovering after its recent slump, with automobiles and electronic components leading the recovery, according to the latest quarterly WTO Goods Trade Barometer issued on Monday. 

However, mixed economic results including below trend performance of raw materials and container shipping, coupled with increasing geopolitical tensions especially in light of the recent developments in West Asia, make the near-term outlook highly uncertain, according to a statement by WTO.

“The current reading of 100.7 for the barometer index is above the previous reading of 99.1 from last August and close to the baseline value of 100. This suggests that merchandise trade volume will gradually revert towards its medium-term trend in the second half of 2023, although uncertainty remains high due to mixed economic data and rising geopolitical tensions,” per the statement.

Key indicator

The Goods Trade Barometer is a composite 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.

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“World merchandise trade volume was flat in the second quarter of 2023, up 0.2 per cent compared to the previous quarter but still down 0.5 per cent year-on-year. Trade statistics for the third quarter should come in slightly stronger thanks to accelerating GDP growth in the US and China, even as a stagnant European Union economy continued to weigh on global demand,” the statement noted.

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In Q4, the year-on-year trade growth is likely to be strong due to the reduced amount of trade in the same period last year as high energy prices, rising interest rates and pandemic-related disruptions weighed on economic growth in leading economies. These developments are consistent with the WTO’s October 2023 forecast of 0.8 per cent increase in global trade volume in 2023. “While the forecast remains unchanged, risks to the trade outlook have shifted towards the downside in light of recent developments in the Middle East,” the statement added.

The strength of the automotive products and electronic components indices may be explained by surging global demand for electric vehicles, while the weak result for raw materials may be partly due to weakening property markets as interest rates remain elevated, the statement explained.

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