‘World Trade Outlook Mixed as Barometer Signals a Rise'
The latest World Trade Organization (WTO) Goods Trade Barometer report has indicated that global trade volumes are set to increase in the coming months after witnessing stagnation last year. However, escalating monetary policy actions and falling export orders continue posing challenges to the sustainability of the recovery.
According to the WTO, the barometer, which acts as an early indicator of merchandise trade, currently stands at 103 – above the average trade volume index and baseline level of 100. This suggests trade picked up momentum in the third quarter of 2024. Key components like automotive products, container shipping and air freight are showing strength.
While new export orders, a major factor of the barometer, are marginally positive, they have started declining recently. Combined with a sharp drop in the raw materials index, uncertainty looms over the trade outlook. The electronic components sub-index remains weak due to ongoing supply constraints.
Trade volumes had started recovering in the final quarter of 2023 after staying flat previously. In the first three months of 2024, it grew 1% quarter-on-quarter and 1.4% year-on-year. Recent regional trade value data, however, pointed to softer European demand versus other areas.
For India, merchandise exports contracted 3.1% in 2023-24, with labor-intensive sectors severely impacted. The WTO forecast and rising barometer values could mean some export rebound later this year. But monetary tightening in developed nations and weakening global demand pose downside risks to trade resuming pre-pandemic growth trajectory. Continued volatility appears imminent as various headwinds persist.
