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Data Suggests Stagnating Global Trade Growth

The latest World Trade Organization (WTO) Goods Trade Barometer was steady but below the recent trend line for merchandise trade, suggesting that global goods trade continued to grow in the second quarter, but that the pace of growth was slower than in the prior quarter and is likely to remain weak in the second half of the year.

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. The latest reading of 100.0 coincides exactly with the baseline value of the index, indicating on-trend trade expansion, the WTO noted.

However, the overall barometer remained below a companion index representing actual merchandise trade volumes, suggesting that year-on-year trade growth may slow further but remain positive when official second quarter statistics become available. Trade was weighed down by the conflict in Ukraine but buoyed by the lifting of Covid-19 lockdowns in China, according to the WTO.

The volume of world merchandise trade plateaued with year‐on‐year growth slowing to 3.2 percent the first quarter, down from 5.7 percent in the fourth quarter of 2021. The slowdown only partly reflected the impact of the conflict in Ukraine, which broke out in late February, with lockdowns in China also weighed heavily on trade in the first quarter. 

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The components of the goods barometer were a mixed bag, with most indices showing on trend or below trend growth. The forward-looking export orders index (100.1) was on trend but has turned downward. The automotive products index (99.0) was only slightly below trend but has lost its upward momentum, the report said.

Indices for air freight (96.9) and electronic components (95.6) were below trend and pointing down, while the raw materials index (101.0) has recently risen slightly above trend. The main exception was the container shipping index (103.2), which has risen firmly above trend as shipments through Chinese ports have increased with the easing of Covid restrictions.

The latest barometer reading was consistent with the WTO’s most recent trade forecast issued in April, which predicted 3 percent growth in the volume of world merchandise trade in 2022. However, uncertainty surrounding the forecast has increased due to the ongoing conflict in Ukraine, rising inflationary pressures and expected monetary policy tightening in advanced economies, the WTO said.