Global trade slows in Q2 – WTO

MANILA, Philippines — Global merchandise trade volumes are seen to have further slowed down while remaining positive in the second quarter of the year as the impact of the Russia-Ukraine conflict is offset by relaxation of pandemic controls in China,  according to the World Trade Organization (WTO).

In a statement, the WTO said its latest Goods Trade Barometer issued on Aug. 23 was steady but below the recent trend line for merchandise trade.

WTO said  this suggests that global goods trade continued to grow in the second quarter but that the pace of growth was slower than in the first quarter and is likely to remain weak in the second half of the year.

Trade was simultaneously weighed down by the conflict in Ukraine and buoyed by the lifting of COVID-19 lockdowns in China.

Based on the latest barometer, the volume of world merchandise trade plateaued with year-on-year growth slowing to 3.2 percent in the first quarter,  down from 5.7 percent in the fourth quarter of 2021.

“The slowdown in the first quarter only partly reflected the impact of the conflict in Ukraine, which broke out in late February. Lockdowns in China also weighed heavily on trade in the first quarter,”the WTO said.

The barometer is a composite leading indicator for world trade, providing real-time information on the trajectory of merchandise trade relative to recent trends.

“The components of the goods barometer are a mixed bag, with most indices showing on trend or below trend growth,”the WTO said.

It said  the forward-looking export orders index, which registered at 100.1, is on trend but has turned downwards.

“The automotive products index (99.0) is only slightly below trend but has lost its upward momentum,”the WTO said.

It said indexes for air freight (96.9) and electronic components (95.6) are below trend and pointing down, while the raw materials index (101.0) has risen slightly above trend.

The main exception is the container shipping index, which registered at 103.2, rising firmly above trend as shipments through Chinese ports increased with the easing of COVID-19 restrictions.

The WTO said the latest barometer reading is consistent with its most recent trade forecast from last April, which predicted 3.0 percent growth in the volume of world merchandise trade in 2022.

“However, uncertainty surrounding the forecast increased due to the ongoing conflict in Ukraine, rising inflationary pressures, and expected monetary policy tightening in advanced economies. A revised forecast will be issued in early October,”the WTO said.