Trade growth is likely to slow further into the fourth quarter of 2018, according to the WTO’s latest World Trade Outlook Indicator (WTOI).
The most recent WTOI reading of 98.6 is the lowest since October 2016 and reflects declines in all component indices. It is below the previous value of 100.3 and falls under the baseline value of 100 for the index, signaling that trade growth in the coming months is expected to be below-trend.
The latest results are consistent with the WTO’s downgraded outlook for global trade issued in September amid escalating trade tensions and tighter credit conditions in important markets. The revised forecast anticipated trade expansion to slow to 3.9 percent in 2018 and 3.7 percent in 2019 from 4.7 percent in 2017.
The WTOI index result was driven by the steady decline in the export orders index (96.6), which remains below trend and is approaching the weakest point recorded in 2012 during the eurozone crisis. Additionally, indices for automobile production and sales (96.9), electronic components (93.9) and agricultural raw materials (97.2) have moved from on trend to below trend. International air freight (100.0) and container port throughput (101.2) have dipped but remain on trend. The container port throughput index is a measure of throughput of major international ports in North America, Europe and Asia. Container shipping tracks world trade quite closely.
Designed to provide “real time” information on the trajectory of world trade relative to recent trends, the WTOI aims to identify turning points and gauge momentum in global trade growth. Readings of 100 indicate growth in line with medium-term trends.