April 22, 2024

Q2 Global Merchandise Trade Posts Turnaround – WTO

Global merchandise trade showed signs of a turnaround in the second quarter of 2023, but further upward momentum in the third quarter and beyond may be limited as long as export orders remain weak.

According to the World Trade Organisation (WTO) Goods Trade Barometer, the current reading of 99.1 is up from the previous reading of 95.6 from last May, and close to the baseline value of 100.

“This suggests that merchandise trade volume turned up in the second quarter after two quarters of decline, but that it remains slightly below trend,” the WTO Barometer said.

“Sustained recovery in the third quarter and beyond is less than certain as long as the barometer’s export orders component (based on purchasing managers’ indices) remains weak,” it added.

The Goods Trade Barometer is a composite leading 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.

The volume of merchandise trade was down 1.0 percent year-on-year and 0.3 percent quarter-on-quarter in the first quarter of 2023, extending a downturn that began in the fourth quarter of 2022.

“Several factors contributed to the slump, including high food and energy prices linked to the war in Ukraine, and tighter monetary policies aimed at fighting inflation in advanced economies,” the Barometer informed.

Global import demand remains weak, weighed down by sluggish economic growth in leading economies including the European Union and China.

The current results are slightly weaker than WTO’s most recent trade forecast issued on April 5, which projected 1.7 percent growth in merchandise trade in 2023.

“However, the target is still attainable if trade growth picks up in the second half of the year as expected,” WTO observed.

Click here to view the Goods Trade Barometer.

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