The World Trade Organization’s Goods Trade Barometer has lost momentum in the fourth quarter and is likely to remain weak in the first quarter of 2023.

According to the latest WTO Goods Trade Barometer released yesterday (1 March), world trade growth in volume terms is weakening after falling to 92.2, down from 96.2 in the previous release and well below the baseline value of 100.

The Goods Trade Barometer is a composite leading indicator for world trade. It provides real-time information on the trajectory of merchandise trade relative to recent trends. Values greater than 100 signal above-trend expansion while values less than 100 indicate below-trend growth.

The barometer index finished below the merchandise trade volume, which stood at 106.6 in the third quarter thanks to resilient exports in Europe and the Americas. Preliminary data suggest the merchandise trade index will follow the barometer index down once quarterly trade volume statistics for the fourth quarter are released.

The volume of world merchandise trade was up 5.6% in the third quarter of 2022 compared to the same quarter in the previous year.

Meanwhile, cumulative year-on-year growth for the first three quarters of 2022 stood at 4.4%, above the WTO’s forecast released last October of 3.5% for the whole year. A downturn in the fourth quarter would bring actual trade growth more in line with the WTO’s forecast for 2022. Any slowdown may prove to be short lived since container throughput of Chinese ports and new export orders from Purchasing Managers’ Indices (PMIs) have already started to pick up.

The export orders index (97.4) remains below trend but is rising, hinting at a possible upturn in the near future. On the other hand, indices for container shipping (89.3), air freight (87.8), electronic components (84.9) and raw materials (92.0) are all below trend and declining. This suggests that weakness in trade is broad-based, impacting many sectors.