WTO Merchandise Trade Barometer drops to 84.5 points

The World Trade Organization (WTO) Merchandise Trade Barometer stood at 84.5, which is 15.5 points below the benchmark value of 100 for the index and a decline of 18.6 points year-on-year.

This is generally consistent with the WTO’s June trade forecast update, which estimated an 18.5% drop in merchandise trade volumes in the second quarter.

Merchandise Trade Barometer provides real-time information on the trajectory of world trade in relation to recent trends.

The WTO had also projected that the expected decline in trade for all of 2020 would be closer to the less pessimistic forecast made in April of -13% and is unlikely to achieve the worst results.

World trade growth has slowed since the fourth quarter of 2018 and finally turned negative in the third quarter of 2019.

The seasonally adjusted volume of world merchandise trade was already down 3.0% year-on-year in the first quarter of 2020, a decline that only partially reflects the effect of the Covid-19 pandemic.

The full economic impact of the virus and associated containment efforts are expected to be seen in the second quarter statistics.

If the June WTO estimate is made of an 18.5% year-on-year decline in world trade for the second quarter, that would imply a 14% drop between the first and second quarters.

Merchandise Trade Barometer

All the indices that make up the barometer remain well below trend, with many registering record lows, although some have begun to stabilize.

The Merchandise Trade Barometer is designed to measure momentum and identify turning points in world trade growth. Readings of 100 indicate growth in line with medium-term trends; Readings above 100 suggest growth above trend, while readings below 100 indicate growth below trend.

The auto (71.8) and air transport (76.5) product indices are by far the worst on record since 2007.

Container shipping (86.9) also remains deeply depressed, with export orders (88.4) showing signs of recovery as this index has shifted upward.

Meanwhile, the electronic components (92.8) and agricultural commodities (92.5) indices have held up relatively well, showing only modest declines.

The Merchandise Trade Barometer confirms the sharp decline in trade, but points to an incipient recovery.


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