Trade growth is likely to slow further into the fourth quarter of 2018 according to the WTO’s latest World Trade Outlook Indicator (WTOI) released on 26 November. The most recent WTOI reading of 98.6 is the lowest since October 2016 and reflects declines in all component indices. It is below the previous value of 100.3 and falls under the baseline value of 100 for the index, signalling that trade growth in the coming months is expected to be below-trend.
The continued moderation in the overall WTOI index was driven by the steady decline in the export orders index (96.6), which remains below trend and is approaching the weakest point recorded in 2012 during the eurozone crisis. Indices for automobile production and sales (96.9), electronic components (93.9), and agricultural raw materials (97.2) have meanwhile moved from on trend to below trend. International air freight (100.0) and container port throughput (101.2) have dipped but remain on trend.
The latest results are consistent with the WTO’s downgraded outlook for global trade issued in September amid escalating trade tensions and tighter credit conditions in important markets. The revised forecast anticipated trade expansion to slow to 3.9 % in 2018 and 3.7 % in 2019 from 4.7 % in 2017.
Designed to provide “real time” information on the trajectory of world trade relative to recent trends, the WTOI is not intended as a short-term forecast, although it does provide an indication of trade growth in the near future. It aims to identify turning points and gauge momentum in global trade growth. As such, it complements trade statistics and forecasts from the WTO and other organizations. 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 full World Trade Outlook Indicator is available here.
Further details on the methodology are contained in the technical note here.