The World Trade Organization’s (WTO) Goods Trade Barometer hit a record high in the latest reading, as global merchandising trade recovers from the coronavirus pandemic.
Issued on August 18th, the reading showed both the depth of the shock from the pandemic in 2020 and how strong the current trade expansion really is.
While the index is still above trend, the rate it’s rising at is starting to decrease, which could mean the upward momentum is nearing its peak.
The barometer is made up of a number of component indices, all of which were above trend for the previous month, demonstrating that recovery is not concentrated in a single area.
Air freight, container shipping and raw materials all displayed faster than average trade growth, with 114.0, 110.8 and 104.7 on their respective indices.
The air freight index’s rise can be put down to the return to air travel in many mainly developed nations as pandemic-related travel restrictions have been eased.
There’s potential for a sudden turn down again if Covid-19 variants continue to spread and governments decide to reimpose travel bans.
A shortage of semiconductors has had an impact on the automotive products index, displaying at 106.6, and the electronic components index at 112.4.
While the former managed to rise due to a smoothing of the underlying data, the latter experienced a small decline.
Looking forward, the new export orders index stood at 109.3, seeming to reinforce the prediction that the speed of recovery is due to slow down in the near future.
The barometer reading chimes with the WTO forecast of March 31st, which predicted the volume of world merchandise trade in 2021 would increase by eight per cent.
It comes in the wake of a 5.3 per cent drop in 2020, driven by the pandemic.
The early days of the coronavirus outbreak last year saw the sharpest decline in global goods trade, but it has steadily returned to growth since then.
In the first quarter of 2021, the volume of merchandise trade was up 5.7 per cent year-on-year, which is the biggest jump since 2011, when it rose 5.8 per cent in the third quarter.
It’s expected that the barometer will show an even larger year-on-year rise for quarter two when the trade volume data becomes available.
