WTO: Global merchandise trade on the rise

The latest readings of the WTO’s World Trade Outlook Indicator suggest that global merchandise trade growth will remain above trend as we enter the third quarter of 2017.    Global merchandise trade growth will continue to strengthen in the third quarter of 2017, according to the World Trade Organization’s (WTO) World Trade Outlook Indicator (WTOI).
   The latest reading of 102.6 on the WTOI is higher than the previous reading of 102.2 issued in May this year, suggesting sustained momentum for trade growth. The readings earlier this year anticipated moderate trade growth after weak expansion in 2016, which have now been adjusted to estimate growth above trend. Strong performances in air freight, export orders and container shipping are balanced by weaker results in other indices, according to the WTO.
   The latest reading is also the highest level of the indicator since April 2011, suggesting that trade volume growth will continue to be above trend. The WTO cites strong growth in export orders, air freight and container shipping as motivating factors in leading the upward trend. Results for agricultural raw materials and electronic components trade have been weaker, yet both indices have been positive, said the WTO.
   However, weak growth in automobile production and sales may signal weakening consumer confidence. According to the WTO, “Global export orders also show signs of plateauing, which could mean that upward momentum in trade growth may have peaked. If this is the case, trade growth would be expected to moderate later this year.”
   The WTOI is designed to provide “real time” information on the trajectory of world trade relative to recent trends. Combining several trade-related indices into a single composite indicator, the WTOI measures short run performance against medium-term trends. Readings of 100 indicate growth in line with medium-term trends; readings greater than 100 suggest above trend growth, while those below 100 indicate the reverse. The direction of change reflects momentum compared with the previous month.