On the 4th local time, the World Trade Organization (WTO)'s latest Goods Trade Barometer indicated that global merchandise trade continued to recover in the third quarter of 2024, following the stagnation of trade demand due to high inflation and rising interest rates in 2023.

However, the WTO also warned that despite the positive signals from the barometer index, the trade outlook remains highly uncertain due to escalating geopolitical tensions, ongoing regional security issues, shifts in monetary policy in developed economies, and weakening export orders.

In fact, major institutions including the WTO have repeatedly cautioned that trade disruptions caused by shipping delays, which are often related to the forced rerouting of vessels in the Red Sea, are one of the significant reasons affecting exports.

Moreover, the impact of rising freight costs on production costs is intensifying.

Advertisement

Chris Rogers, the Head of Supply Chain Research at S&P Global Market Intelligence, told Yicai Global that he expects disruptions to the Red Sea shipping route to last until the end of 2024.

The automotive products index seems to have lost momentum for growth.

The latest WTO Goods Trade Barometer shows that the global merchandise trade sentiment index stands at 103, above the baseline of 100, and slightly higher than the 100.6 published in March this year.

This index suggests that global merchandise trade volume maintained positive growth in the second and third quarters of 2024.

The Goods Trade Barometer is a comprehensive leading indicator of world trade, providing real-time information on the trajectory and recent trends of goods trade.

A barometer value above 100 means trade volume is above trend, while a value below 100 indicates that goods trade is below trend or will be in the near future.

In this instance, among the component indices, the automotive products index is at 103.3, the container transport index is at 104.3, the air transport index is at 107.1, and the new export orders index is at 101.2, all above trend levels, but the WTO stated that the automotive products index has recently seemed to lose growth momentum.

It should also be explained that the new export orders index is usually the most predictive component of the barometer, which is currently slightly positive but has turned downward, which could be a cause for concern in the future.

In addition, the electronic components index is at 95.4, and the raw materials index is at 99.3, with the latter having plummeted over the past three months.

The Global Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global Market Intelligence shows that the global manufacturing PMI supplier delivery times also indicate a decline, the worst level since January of this year.

Among them, the chemical industry has the slowest delivery speed; the automotive industry has experienced its first delay since February; electronic products have also entered a period of delay, hindering the delivery speed of communication equipment, which is the slowest since December 2022.

Rogers told reporters that if you look at each industry in turn, the chemical industry relies on long-distance transportation of raw materials (including oil and basic petrochemical products), and therefore faces the aforementioned transportation challenges; the automotive industry is facing some unique component challenges, such as Swiss Porsche AG facing issues with some aluminum components.

He stated: "The electronics industry actually does not rely on sea freight, and the reason for the delay may be that the demand for consumer electronics (especially mobile phones) has rebounded, exceeding the existing chip manufacturing capacity."

European regional trade growth is weaker than expected.

WTO data shows that global merchandise trade volume began to rebound in the fourth quarter of 2023 and gained momentum in the first quarter of 2024: global merchandise trade volume increased by 1.4% year-on-year and 1.0% quarter-on-quarter in the first quarter of 2024.

At the same time, recent WTO data shows that European regional trade growth is weaker than expected, while trade growth in other regions is stronger than expected.

Previously, statistics from the Organization for Economic Cooperation and Development (OECD) also showed that, in current US dollar terms, after rising in the previous quarter, the growth of goods exports of G20 countries flattened in the second quarter, with the main reason for the slowdown being a reduction in exports from the EU, mainly reflecting a decrease in sales in Germany.

Specifically, in terms of imports, the EU recorded a positive growth (0.2%) for the first time since the second quarter of 2022.

However, in the second quarter, EU exports decreased by 0.9%, mainly reflecting the situation in Germany, where sales of chemicals and other finished products decreased.

Previously, trade data for the first half of 2024 released by the Federal Statistical Office of Germany showed that both German imports and exports have declined.

In the first half of 2024, Germany's most important export goods were automobiles and automotive parts, with an export volume of €135.3 billion.

Compared with the first half of 2023, automobile exports decreased by 2.4%.

Machinery ranks second, with an export volume of €109.6 billion (a year-on-year decrease of 4.4%).

The export of chemical products also shows a similar situation, with an export volume of €75.1 billion in the first half of 2023, and it decreased to €71.8 billion in the first half of this year, which is equivalent to a 4.4% decrease.

In addition, WTO data shows that overall, the average growth rate for the past two quarters is 0.7%, equivalent to 2.7% on an annualized basis.

This is quite close to the organization's latest forecast in April 2024, when the WTO predicted that the volume of world merchandise trade would grow by 2.6% in 2024.