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Info Service on WTO and Trade Issues (Dec22/02) Geneva, 30 Nov (Kanaga Raja) — Global trade growth is likely to slow in the closing months of 2022 and into 2023, mainly on account of weakening global import demand and several related shocks, according to the World Trade Organization. The WTO said that its Goods Trade Barometer’s latest reading of 96.2 is below both the baseline value of the index and the previous reading of 100.0, suggesting slower trade growth in the closing months of 2022 and into next year, in line with its latest trade forecast. The recent divergence between the barometer index and the trade volume index could be due to delayed shipments of goods as a result of supply chain disruptions, it added. According to the WTO, its Goods Trade Barometer is a composite leading indicator for world trade, providing real-time information on the trajectory of merchandise trade relative to recent trends. The WTO said world merchandise trade volume growth continued to slow in the second quarter of 2022, with a 4.7% year-on-year increase similar to the 4.8% rise in the first quarter. The WTO said according to its latest forecast, world trade is expected to decelerate further in the second half of 2022 and remain subdued in 2023 due to several related shocks, including the war in Ukraine, high energy prices, inflation, and monetary tightening in major economies. [In their latest forecast released on 5 October, WTO economists predicted that global merchandise trade volumes will grow by 3.5% in 2022 – slightly better than the 3.0% forecast in April. For 2023, however, they predicted a 1.0% increase – down sharply from the previous estimate of 3.4%. [WTO economists said that trade and output will be weighed down by several related shocks, including the war in Ukraine, high energy prices, inflation, and monetary tightening. [According to the WTO economists, import demand is expected to soften as growth slows in major economies for different reasons. “In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs.” [In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment, said the WTO economists, adding that China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand. [They also said growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries. (See SUNS #9662 dated 7 October 2022.)] Citing the latest reading of its Goods Trade Barometer, the WTO said that the barometer index was weighed down by negative readings in sub-indices representing export orders (91.7), air freight (93.3) and electronic components (91.0). Together, these suggest cooling business sentiment and weaker global import demand, said the WTO. It said the container shipping (99.3) and raw materials (97.6) indices finished slightly below trend and have lost momentum. The main exception is the automotive products index (103.8), which rose above trend due to stronger vehicle sales in the United States and increased exports from Japan as supply conditions improved and as the yen continued to depreciate, said the WTO. +
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