World trade growth is likely to be weak in 2019 second quarter, according to the World Trade Organisation’s (WTO) latest World Trade Outlook Indicator (WTOI). The WTOI reading is 96.3, exactly as it was last February, maintaining the weakest level since 2010 and below the baseline value of 100, signalling continued falling trade growth in the first half of 2019. WTOI does not reflect some major trade measures announced in recent days. The outlook for trade could worsen further if heightened trade tensions are not resolved or if macroeconomic policy fails to adjust to changing circumstances, according to a WRO press release. The latest result of the WTOI was driven by declines in all but two component indices. Indices for international air freight (92.3), automobile production and sales (92.2) and agricultural raw materials (92.4) fell further below trend. The index for container port throughput (101.0) also declined but remained above 100, suggesting growth in line with recent trends. Indices for export orders (96.6) and electronic components (96.7) appear to have bottomed out, even as both remained firmly below-trend. In their April trade forecast, WTO economists estimated that merchandise trade volume growth would fall to 2.6 per cent in 2019, down from 3.0 per cent in 2018, before rebounding to 3.0 per cent in 2020. Any rebound in 2020 would depend on reduced trade tensions and/or improved macroeconomic performance, according to WTO.
