Global trade is likely to slow in the final months of 2022 and into 2023, according to the latest World Trade Organization (WTO) Goods Trade Scoreboard report. The WTO cites global macroeconomic situations such as the Russia-Ukraine crisis, rising energy prices, inflation and monetary tightening in major economies as the main reasons for the slowdown.
The Commodities Barometer is a composite leading indicator of world trade that provides real-time information on how commodity trade is developing relative to recent trends. Values above 100 signal above-trend expansion, while values below 100 indicate below-trend growth. The current barometer reading is 96.2, which is below both the index’s base level and the previous reading of 100, reflecting cooling demand for commodities.
Notably, in October, the WTO forecast commodity trade volume growth of 3.5% in 2022 and 1.0% in 2023, owing to global macroeconomic trends. Commodity trade recorded a slight 4.7% year-on-year increase in the second quarter of this year . Marginal trade was 4.8% in the first quarter of this year. The WTO expects average trade growth of around 2.4% year-on-year (YoY) for the second half of 2022.
“The barometer index was weighed down by negative readings in the export orders (91.7), air freight (93.3) and electronic components (91.0) sub-indices. Taken together, these point to a slowdown in business sentiment and weaker global import demand. The indices for container shipping (99.3) and commodities (97.6) closed just slightly below trend but have lost momentum,” the WTO said in a statement.
“The main exception is the auto product index (103.8), which came out ahead on stronger vehicle sales in the United States and increased exports from Japan as supply conditions improved and the yen continued to weaken,” he added.
Notably, earlier this month the International Monetary Fund (IMF) also lowered its global growth forecast to 2.7% for next year on a unique mix of headwinds, including Russia’s invasion of Ukraine, a rate hike to curb inflation and an ongoing pandemic impact like China’s lockdowns and supply chain disruptions.
“The challenges facing the global economy are immense and weakening economic indicators point to further challenges. However, with careful policy action and concerted multilateral efforts, the world can move towards stronger and more inclusive growth,” the IMF said in its report.
Meanwhile, India’s exports saw its sharpest decline in two years, falling 15.9% to $29.78 billion in October from $35.45 billion in September. The country’s trade deficit also widened by 4.66% in October to $26.91 billion from $25.71 billion in September this year and 50.25% from $19.9 billion in October last year.
According to a report by S&P Global, the country’s trade balance recorded a decline of 3.6% of the country’s GDP in the first nine months of 2022. “In India, the $73 billion decline in foreign exchange reserves through August far outpaced losses attributed to valuation changes ($30 billion),” it said.
