Sign of recession? WTO report says strong headwinds to slowdown global trade growth in 2023

The Goods Trade Barometer is released on a quarterly basis depending on data availability.

Recession is a buzzword in economic circles for the last few months and many countries are already feeling the brunt. Global economic growth has slowed down and many developed nations are struggling to revive their economy. Now a World Trade Organisation (WTO) report has said that global trade growth is likely to slow down in the closing months of 2022 and into 2023 as the world economy continues to be engulfed by strong headwinds. 

The latest World Trade Organization Goods Trade Barometer showed that the current Goods Trade Barometer index reading is 96.2. The 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. Values greater than 100 signal above-trend expansion while values less than 100 indicate below-trend growth.

WTO said that the downturn in the index could be attributed to the war in Ukraine, high energy prices, and monetary tightening in major economies. "The downturn in the goods barometer is consistent with the WTO's trade forecast of 5 October, which predicted merchandise trade volume growth of 3.5% in 2022 and 1.0% in 2023 due to several related shocks including the war in Ukraine, high energy prices, and monetary tightening in major economies," said the report.

The 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.

The container shipping (99.3) and raw materials (97.6) indices finished only slightly below the trend but 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," it said.

The Goods Trade Barometer is released on a quarterly basis depending on data availability.