Goods Barometer Rises As Imports Surge In Early 2025 Amid Weakening Export Orders

Global trade in goods saw a notable rise at the start of 2025, as importers increased purchases before expected tariff hikes. Despite this, declining export orders indicate that this growth might not last. The WTO Goods Trade Barometer climbed to 103.5 from 102.8 in March, while the new export orders index dropped to 97.9, suggesting weaker trade growth later in the year.

The Goods Trade Barometer is a key indicator for global trade, offering real-time insights into merchandise trade trends. A barometer reading above 100 indicates higher-than-average trade volumes, whereas a reading below 100 suggests that trade has dipped below trend or may do so soon. The current barometer reading of 103.5 surpasses both the baseline value of 100 and the quarterly trade volume index.

Despite the positive barometer reading, the dip in export orders and temporary frontloading imply that trade growth could slow down as companies reduce imports and use up existing inventories. The most predictive component of the barometer, the new export orders index at 97.9, has fallen below its baseline value of 100, indicating potential weaker trade growth later this year.

While new export orders have declined, other components of the barometer have risen above trend levels. Transport-related indices like air freight (104.3) and container shipping (107.1) show increased goods movement. The automotive products index (105.3) is also above trend due to strong vehicle production and sales.

The electronic components index reached 102.0 after underperforming in previous years, while the raw materials index shows modest growth at 100.8, just above baseline levels.

Trade Volume Projections

World merchandise trade volume growth slowed in late 2024 but is expected to recover in early 2025 based on barometer data and preliminary figures. The WTO Secretariat's Global Trade Outlook and Statistics report from April 16 projected stable trade growth of 2.7% for 2025 under low-tariff conditions present at the year's start.

If actual policies remain unchanged by mid-April, a slight contraction of -0.2% is anticipated. However, recent developments like US-China and US-UK agreements and higher tariffs on steel and aluminium have slightly adjusted forecasts to a flat outlook of 0.1%.

Potential factors such as reinstated US reciprocal tariffs or global spread of policy uncertainty could lead to further trade contraction.

With inputs from WAM