The World Trade Organization (WTO) published its latest quarterly Goods Trade Barometer reading on 19 August 2020. The release shows a continued drop in goods trade associated with the COVID-19 pandemic, but hints at the early beginnings of stabilization.

The WTO publishes two sets of indicators, each launched in September 2019. The Goods Trade Barometer (formerly the World Trade Outlook Indicator) shows how the latest data points compare to short-term trends in goods trade, providing an indication of potential trajectory in the near future based on a variety of component indices that are combined into a single composite index. The Services Trade Barometer combines six component indices into a composite index to illustrate the current state of services prior to the release of official statistics. Each is intended to complement traditional trade statistics and forecasts.

An L-shaped, rather than V-shaped, recovery trajectory cannot be ruled out.

Each barometer is normalized for medium-term trends, with a score of 100 indicating growth in line with medium-term trends. Scores that exceed 100 indicate above-trend growth, and those below 100 show below-trend growth. Scores that deviate by more than 5 points are considered substantially above or below trend.

A WTO release notes that the latest Goods Trade Barometer’s composite score of 84.5 is 15.5 points below the baseline value of 100 for the index and down 18.6 points year-on-year. This scoring is generally consistent with the WTO’s June statistics, which imply a 14% drop in global trade volume between the first quarter and second quarter of 2020. While nearly all drivers of goods trade considered (export orders, automotive products, container shipping, air freight, electronic components, and raw materials) have declined, the WTO suggests that the indices “have held up relatively well” and that world trade in 2020 may be evolving in line with the less pessimistic scenario outlined in an April forecast. The release cautions however, that a “V-shaped” recovery is uncertain, and emphasizes the possibility of an “L-shaped” pathway where global trade levels out “well below its pre-pandemic trajectory.”

A methodology document notes that the Trade Goods Barometer is published quarterly, whereas the Services Trade Barometer is updated twice per year. [WTO Goods Trade Barometer News Release] [WTO Trade Barometers Landing Page] [WTO Goods Trade Barometer Methodology]