Nigeria: Report Reveals Further Weakening in Global Trade

20 August 2019

The growth of world merchandise trade volumes is likely to remain weak in the third quarter of 2019 according to the World Trade Organisation's (WTO) latest 'Goods Trade Barometer.'

The latest reading of 95.7 from the barometer, formerly the World Trade Outlook Indicator (WTOI), according to the report, was lower than the previous release and signalled that stronger trade growth was not yet in sight.

The latest reading continued to fall well below the baseline value of 100 for the index of the renamed barometer, which features a design revamp ahead of the launch of a new Services Trade Barometer in September, the report added.

It stated that the loss of momentum in goods trade had already been confirmed in previous quarters where official data were available.

The barometer suggested that below-trend expansion in merchandise trade would persist in the coming months.

"Sustained weakness in the barometer index was driven by below trend values in all component indices. The international air freight (91.4) and electronic components (90.7) indices showed the strongest deviations from trend, with readings well below previous releases. Indices for export orders (97.5), automobile production and sales (93.5) and agricultural raw materials (97.1) all remained below trend although they show some signs of having bottomed out.

"Only the index for container shipping (99.0) was close to the baseline value of 100," it added.

Last month, the Director-General's mid-year report underlined that trade flows hit by new restrictions continued to be at historically high levels between mid-October 2018 and mid-May 2019. Tensions leading to higher trade barriers and greater uncertainty pose significant downside risks to trade growth forecasts.

The Goods Trade Barometer provides, as the WTOI did, "real time" information on the trajectory of world trade relative to recent trends. It aims to identify turning points and gauge momentum in global trade growth. As such, it complements trade statistics and forecasts from the WTO and other organisations.

Readings of 100 indicate growth in line with medium-term trends; readings greater than 100 suggest above-trend growth, while those below 100 indicate below-trend growth.

The WTO had called for increased trade cooperation across the globe so as to enhance growth of the global economy.

Addressing a WTO economic conference, the Director General, WTO, Roberto Azevêdo, had argued that current trade tensions provides an opportunity for the rules-based multilateral trading system to prove its value and for reforms to be deliberated in response to the evolving global economy.

Sound analysis and strong evidence are vital in this effort, Azevêdo noted.

According to the global economy is presently in a momentous period in global trade.

"We face a wide range of challenges. But also I believe that this is a once-in-a-generation opportunity to renew cooperation in global trade.

"Trade has proven to be an engine of growth, productivity, innovation, job creation and development. The multilateral trading system makes a huge contribution to that end.

"We have to ensure that the system continues to play this positive role, and that it helps members deal with the challenges of the modern world. Events like this can make a huge contribution to this debate," he pointed out.

Azevêdo, said one way to strengthen the system was by making case for trade, with strong evidence and data. "Economic research is vital here. And so I hope that this will be on your minds today as well. The benefits of cooperation on trade issues are many.

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