World trade growth may have peaked

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Global export orders show signs of levelling off, the World Trade Organization (WTO) has warned.

The claim is based on new data published in its latest World Trade Outlook Indicator (WTOI) which provides “real time” information on developments in world trade compared to recent trends.

By combining several trade-related indices into a single indicator, the WTOI measures short-run performance against medium-term trends.

The latest indicator suggests that global merchandise trade growth will continue to strengthen in the third quarter (Q3) of 2017.

The latest reading of 102.6 is higher than the 102.2 recorded in May this year and that, the WTO points out, suggests sustained momentum for trade growth. The score of 102.6 is, in fact, the highest level reached by the indicator since April 2011.

Although air freight, export orders and container shipping all performed strongly, they were balanced by weaker results in other indices including automobile production and sales.

Export orders are above trend, the WTOI reports, but they appear to have reached a plateau, which suggests that upward momentum in trade growth may have peaked. If that is the case, then trade growth is anticipated to moderate toward the end of the year.

The WTO stresses that, although the indicator suggests how trade might grow in the near future, it is not intended as a short-term forecast.

Rather, it should be seen as something that can help identify turning points and gauge momentum in global trade growth and as a complement to trade statistics and forecasts from the WTO and other organisations.

The two-page World Trade Outlook Indicator can be found here.

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