Global merchandise trade growth will continue to strengthen in the third quarter of 2017, according to the World Trade Organization’s latest World Trade Outlook Indicator (WTOI). The latest reading of 102.6 is higher than the previous reading of 102.2 issued in May this year, suggesting sustained momentum for trade growth.
Strong performances in air freight, export orders and container shipping are balanced by weaker results in other indices.
The WTOI is designed to provide "real-time" information on the trajectory of world trade relative to recent trends. By combining several trade-related indices into a single composite indicator, the WTOI measures short-run performance against medium-term trends.
The latest reading of 102.6 is the highest level the indicator has reached since April 2011, suggesting that trade volume growth will continue to be above trend in the third quarter of 2017. Strong growth in export orders, air freight and container shipping leads the upward trend in the indicator as economic activity picks up around the world.
Results for agricultural raw materials and electronic components trade have been weaker, but both indices have turned upward recently. Agricultural raw materials had a 98.8 index level, with a moderate increase for the quarter.
Meanwhile, weak growth in automobile production and sales is a cause for concern as it may signal weakening consumer confidence. 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.
These results are slightly stronger than WTO’s most recent trade forecast of from April, which anticipated moderate trade growth this year after weak expansion last year.
The WTOI is not intended to be a short-term forecast, although it does provide an indication of trade growth in the near future.
Its main contribution is to identify turning points and gauge momentum in global trade growth. As such, it complements trade statistics and forecasts from WTO and other organizations.
WTOI readings of 100 indicate growth in line with medium-term trends; readings greater than 100 suggest above-trend growth, while readings below 100 indicate the reverse. The direction of change reflects momentum compared with the previous month.