WTO goods barometer rises above trend, signals upturn in trade volume

The latest reading of 103.0 for the barometer index is above both the quarterly trade volume index and the baseline value of 100 for both indices, suggesting that merchandise trade volume growth should remain positive in Q2 and Q3 2024 once official statistics for these periods become available, WTO said in a release.

All of the barometer's component indices, barring the electronic components index, are currently on or above trend.

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. The index of raw materials (99.3) is nearly on trend but has declined sharply over the last three months.

Despite the positive signal from the barometer index, the outlook for trade remains highly uncertain due to rising geopolitical tensions, ongoing regional conflicts, shifting monetary policy in advanced economies and weakening export orders, it noted.

The 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 values less than 100 suggest that goods trade has either fallen below trend or will do so in the near future.

After remaining flat since the final quarter of 2022, the volume of world merchandise trade started to turn up in Q4 2023 and gained momentum in Q1 2024. In Q1 2024, the last period for which data is available, trade was up 1.0 per cent quarter on quarter (QoQ) and 1.4 per cent year on year (YoY).

QoQ growth in the last two quarters averaged 0.7 per cent, which is equivalent to 2.7 per cent on an annualised basis. This is quite close to the WTO's most recent forecast of April 2024, which predicted a 2.6 per cent increase in world merchandise trade volume in 2024.

Recent data in value terms show weaker than expected trade growth in Europe and stronger than expected growth in other regions.

Fibre2Fashion News Desk (DS)