WTO Trade Barometer indicates global goods trade remains stable, but policy uncertainty poses risks

WTO Trade Barometer indicates global goods trade remains stable, but policy uncertainty poses risks - Trade Treasury Payments

The latest World Trade Organization (WTO) Goods Trade Barometer indicates that global merchandise trade remained steady at the start of 2025. The index read 102.8 – virtually unchanged from December’s 102.7, suggesting that trade growth continues at a moderate pace, though rising trade policy uncertainty and potential tariff measures could weigh on future performance.

The Goods Trade Barometer is a leading indicator for world trade that provides a real-time assessment of trade conditions relative to historical trends. Readings above 100 signal above-trend growth, while readings below 100 suggest a slowdown.

The latest reading confirms a continuation of the modest recovery observed throughout 2024.

The WTO’s data for the third quarter of 2024, the most recent complete dataset, indicates that world merchandise trade volume increased by 3.3% year-on-year, aligning with the organisation’s October 2024 forecast, which projected an annual trade volume increase of 2.7% for the year.

However, growth varied by region. European trade activity was weaker than expected, while Asian exports and North American imports exceeded forecasts. The WTO’s next Global Trade Outlook and Statistics report, due in April 2025, will provide a more comprehensive analysis of global trade trends.

The current barometer’s component indices suggest stable trade conditions. Export orders (101.0), electronic components (102.3), and raw materials (101.6) remain on trend, while automotive products (105.5), container shipping (103.7), and air freight (102.7) are performing above trend. Export orders, a key forward-looking indicator, remain close to the baseline and warrant continued monitoring.

The WTO cautions that since many businesses have been reported to be stockpiling imports in anticipation of potential trade policy changes, the latest barometer reading may indicate short-term adjustments rather than sustained growth. If this is the case, it would be reflected in weaker demand in the latter half of the year as larger inventory volumes reduce the need for businesses to make additional purchases.

Despite the stable indicators, uncertainty over trade policies remains a concern. US President Trump’s protectionist rhetoric and policies have had a destabilising impact on the world trading system and are widely expected to disrupt trade flows and impact business confidence should they continue or escalate in the coming months.

While current trade conditions remain stable, future growth will depend on policy developments and global economic conditions. The WTO will continue to monitor trade trends and provide further insights in upcoming reports.