Global merchandise trade is continuing its strong recovery from the shock of the COVID-19 pandemic, according to the World Trade Organization’s (WTO) Goods Trade Barometer, which reached a new high in its latest measurement.
The Goods Trade Barometer is a composite leading indicator that provides real-time information on merchandise trade’s trajectory in relation to current trends, ahead of traditional trade volume statistics. The most recent barometer rating of 110.4 is the highest since the indicator was initially released in July 2016, and up more than 20 points year on year.
The rise in the barometer reflects the current intensity of trade expansion as well as the magnitude of the pandemic-induced shock in 2020. While the indicator is still well above trend, it has begun to rise at a slower pace, which could indicate an upward trade momentum.
In recent months, all of the barometer’s component indexes were above trend, indicating the recovery’s broad-based nature. Indices for airfreight (114.0), container shipping (110.8), and raw materials (104.7) continued to rise, reflecting faster-than-average trade growth.
Despite the fact that automobile production and sales declined in some nations in July, due to a semiconductor shortage, the automotive products index (106.6) increased for some underlying reasons. But the index of the electronic component (112.4) has dropped slightly as a result of this shortfall.
The forward-looking new export orders index (109.3) has slowed more significantly, indicating that the rate of recovery is expected to slow in the near future.
Since a significant drop in the second quarter of 2020 during the early days of the pandemic, global goods trade has been steadily increasing. In the first quarter of 2021, merchandise trade volume was increased by 5.7 percent year on year, the largest jump since the 5.8 percent rise in the third quarter of 2011.
The outlook for world trade continues to be overshadowed by downside risks, including regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries. COVID-19 continues to cast the greatest threat to the outlook for trade, as new waves of the virus could easily undermine the recovery.