WTO TRADE INDICATOR CONFIRMS SLOWER GLOBAL TRADE GROWTH COMING IN Q1 2019
SOURCE: 02-19-19 - WTO - "WTO trade indicator points to slower trade growth into first quarter of 2019"
- The simultaneous decline of several trade-related indicators should put policy makers on guard for a sharper slowdown should the current trade tensions remain unresolved.
The most recent WTOI reading of 96.3 is the weakest since March 2010 and below the baseline value of 100 for the index, signalling below-trend trade expansion into the first quarter.
- Weakness in the overall index was driven by steep declines in the component indices, which appear to be under pressure from heightened trade tensions.
- Indices for export orders (95.3), international air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have shown the strongest deviations from trend, approaching or surpassing previous lows since the financial crisis.
- Only the index for container port throughput remained relatively buoyant at 100.3, showing on-trend growth.
- Temporary factors may have influenced some of the indices.
- Front-loading of imports ahead of anticipated US-China tariffs may have sustained container shipping to some extent,
- While technical problems in the German automotive sector may have contributed to weakness in automobile production and sales.
- This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility could foreshadow a broader economic downturn.
- The WTO downgraded its trade forecast last September amid escalating trade disputes and tighter credit market conditions.
Trade growth is currently forecast to slow to 3.7% in 2019 from an expected 3.9% in 2018, but these estimates could be revised downward if trade conditions continue to deteriorate.