Geneva: Global goods trade experienced a notable increase in the first quarter of 2025, primarily driven by a surge in imports as buyers moved to frontload purchases in anticipation of impending higher tariffs. However, the decline in export orders raises concerns about the sustainability of this growth.
According to Emirates News Agency, the latest WTO Goods Trade Barometer recorded an increase to 103.5, up from 102.8 in March. Despite this positive trend, the forward-looking new export orders index fell to 97.9, indicating potential weaker trade growth later in the year. The Goods Trade Barometer serves as a composite leading indicator for world trade, providing real-time insights into the trajectory of merchandise trade relative to recent trends. Barometer values exceeding 100 signify above-trend trade volumes, while values below 100 suggest goods trade has either fallen below trend or is likely to do so soon.
The current barometer reading of 103.5 surpasses both the baseline value of 100 and the quarterly trade volume index. However, the decline in export orders and the temporary nature of import frontloading imply that trade growth may decelerate as businesses reduce imports and draw down on inventories. The new export orders index, a key predictive component of the barometer, has fallen to 97.9, entering contraction territory and signaling weaker trade growth later in the year. Nevertheless, other barometer components have shown above-trend growth. Transport-related indices, such as air freight (104.3) and container shipping (107.1), have increased, reflecting heightened goods movement. The automotive products index (105.3) has also risen due to consistent vehicle production and sales, while the electronic components index (102.0) has recovered after underperforming in 2023 and 2024. The raw materials index (100.8) indicates modest growth, just above baseline.
World merchandise trade volume growth had moderated in the fourth quarter of 2024 but is expected to rebound in the first quarter of 2025, based on the goods barometer and preliminary trade data. The WTO Secretariat’s Global Trade Outlook and Statistics report of 16 April 2025 projected stable trade growth of 2.7% for 2025 under a low-tariff scenario. However, under the actual policies in place as of mid-April, a -0.2% contraction was forecasted. Recent developments, including US-China and US-UK trade agreements and higher tariffs on steel and aluminum, have adjusted the forecast slightly, leaving the overall outlook flat at 0.1%. Nonetheless, trade contraction remains a possibility if US reciprocal tariffs are reinstated or if global trade policy uncertainty escalates.