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WTO: Global import demand below trend as goods trade growth continues to slow

Prospects for trade growth in the final months of 2022 and into 2023 continue to look bleak, with weaker global import demand only slightly offset by strong results for the automobile sector, according to the latest goods trade barometer from the World Trade Organization (WTO).

The barometer charts changes in trade growth two to three months ahead of official merchandise trade volume statistics, and measures several individual indices to produce a composite score.

According to the WTO, its barometer index was hindered by negative readings in export orders, which scored 91.7, down from its on trend score of 100.1 in August.

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International air freight also fell further below the baseline from 96.9 to 93.3, while electronic components scored 91, down from 95.6. The data points to “cooling business sentiment and weaker global import demand”, the WTO says.

The only index above the baseline of 100 was automobile production and sales at 103.8, with the sector buoyed by “stronger vehicle sales in the United States and increased exports from Japan as supply conditions improved and as the yen continued to depreciate”, the WTO says.

Container shipping dipped slightly below 100, coming in at 99.3, but still marking a contrast with August’s score, which rose above trend due to increased shipments through Chinese ports.

The barometer’s current reading marks an overall decline compared to August’s index, which was exactly in line with the baseline value of the index.

The latest barometer index also parted ways from the trade volume index, currently above the baseline, which may be “due to delayed shipments of goods as a result of supply chain disruptions”.

World merchandise trade growth slowed in the second quarter of 2022, representing an increase of 4.7% year on year that echoed the 4.8% increase in the first quarter, the WTO reports.

It predicts that world trade will slow further in the second half of 2022 and continue to be “subdued in 2023 due to several related shocks, including the war in Ukraine, high energy prices, inflation and monetary tightening in major economies”.

The barometer mirrors the trade forecast published in October by the intergovernmental organisation, in which it forecast gloomier times ahead for global merchandise trade growth and downgraded projected growth for 2023 from 3.4% to 1%.

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