WTO: Global commodity trading recovered strongly, with air freight, container traffic and raw material indices continuing to rise

On September 18, the World Trade Organization (WTO) released its latest barometer of trade in goods, with a reading of 110.4. That’s the highest since July 2016.

It is worth noting that all the components of the goods trade barometer were higher than expected, suggesting that the recovery is broadly based. In particular, the indices for air cargo (114.0), container transport (110.8) and raw materials (104.7) continued to rise, indicating that trade growth was above average.

Indices for air freight, container traffic and raw materials continued to rise

The WTO’s barometer of goods trade is a composite leading indicator that is updated quarterly, with a reading above 100 indicating higher than expected growth in global goods trade, while a reading below 100 indicates lower than expected growth.

The WTO noted that all component indexes of the barometer had been above trend for the past month. In addition, the automobile product index (106.6) showed an upward trend in July, despite the decrease in automobile production and sales in some countries due to the shortage of semiconductors.

At the same time, you can see a sharp rise in the air cargo index, reflecting a rebound in the air transport industry, as some (mainly developed) countries relax travel restrictions related to the outbreak.

But the WTO noted that the index could suddenly fall again if the spread of the mutant strain forced countries to reimpose air restrictions.

The WTO said the latest barometer reading was in line with its latest trade forecast, released on March 31, that the volume of world trade in goods would grow by 8 per cent in 2021 after falling by 5.3 per cent in 2020.

Global trade in goods has been growing steadily following a sharp decline in the second quarter of 2020 during the initial phase of the outbreak.

In the first quarter of 2021, the volume of global trade in goods grew by 5.7% year on year, the largest increase since the third quarter of 2011. The latest WTO Barometer of commodity trade suggests an even bigger year-on-year increase in global commodity trade in the second quarter of 2021.

However, the WTO also warned that the outlook for world trade continued to be affected by downside risks, including regional disparities, continued weakness in trade in services and delayed vaccination schedules, particularly in poor countries. The pandemic will continue to pose the biggest threat to the trade outlook, as a new wave of infections could easily derail the recovery.