Global trade in goods seems set to pick up, WTO says
Global trade in goods seems set to pick up, WTO says
We got a fresh look at global trade Monday morning from the World Trade Organization. Once a quarter, it puts together what it calls a barometer of global goods trade — physical stuff, as opposed to services. The WTO forecasts that trading volumes will pick up in the second half of 2023 after slumping over the last 12 months or so.
Two areas where trade has really picked up? Auto parts and electronic components. Coleman Nee, senior economist at the World Trade Organization, said that’s likely because demand for vehicles is high — especially electric vehicles.
“There’s been pretty strong growth in that one sector. It’s sort of the one area that’s standing out,” Nee said.
That says a lot about how consumers are feeling, he said.
“People tend to not make big-ticket purchases when they’re feeling uncertain about the future, so there’s probably some degree of recovery of economic sentiment on the part of consumers,” Nee said.
But part of the reason why trade seems so good right now is because last year was not great.
Twelve months ago, getting semiconductor chips and other auto parts were still problems for carmakers, said Phil Levy, chief economist at the supply chain management company Flexport. “[Problems] which have gotten themselves largely sorted out, and we’re seeing that reflected in the numbers,” Levy said.
Meanwhile, the WTO said raw materials trade is struggling. Think lumber.
Levy said importers are still trying to figure out what consumers want to buy and how much.
“People are trying to find what is the right level, what do I want to have for inventories, what is demand going to look like?” Levy said. “You’ve seen demand swinging around.”
There are signs that global trade is starting to normalize. For instance, last year, many consumers shifted their spending away from goods and toward services.
But Meagan Schoenberger, senior economist with KPMG, said that trend could be ending.
“Goods and services trade may be in more of a balance that was similar to the pre-pandemic level. So people are buying goods and also buying services around the same amount,” she said.
And that, Schoenberger said, looks a lot like global trade before the pandemic.
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