Merchandise Trade Remains Below the Trend


In a report they recently released, the World Trade Organization stated that growth in global merchandise trade will remain behind the trend during the fourth quarter of this year, mostly due to the trade tensions associated with Donald Trump's trade wars.

The Goods Trade Barometer was at 96.6, slightly better than August's 95.7 but below the baseline value.

"Official data confirm the loss of momentum in goods trade foreseen by the Goods Trade Barometer earlier this year," states the report.

A reading of 100 shows an in-line growth, a reading over 100 shows an above-trend growth while a reading under 100 shows a behind the trend growth.

The report also showed how global merchandise trade increased 0.2 percent in Q2, against 2018 second quarter's 3.5 percent, showing a significant deceleration. According to the report, this reflect increasing trade tensions and rising tariffs. The report is in tune with the last WTO report, as they revised the global trade growth projection for this year to the frailest level in a decade. Economists attributed this increasing tariffs, a deteriorating economic situation, the Brexit political crisis and a change in the monetary policy stances around the world.

“Some components of the barometer have stabilised since the last reading in August, while others remain on a downward trajectory reflecting heightened trade tensions and rising tariffs in key sectors,” it said.

The index was mostly driven by automotive products, exports orders and container shipping, while raw materials, air freight and electronic components firmly remained behind trend.

Johnson Promises to End Brexit Uncertainty

Speaking about global trade tensions, Britain's Prime Minister Boris Johnson, who is currently amid a political campaign is set to promise to British business leaders to take the United Kingdom out of the European Union with a deal, a move that would boost the economy and end economic uncertainty.

“With a Conservative majority government you can be sure we will get Brexit done and leave with the new deal that is already agreed – ending the uncertainty and confusion that has paralysed our economy,” he will say.

Latest polls show how far ahead is the British Conservative Party of their main Opposition Party (Labour). This infused optimism on the markets, as many assume that the Opposition Party will extend the Brexit crisis indefinitely, as Corbyn has pledged to renegotiate the whole Brexit Deal (which could take a lot of times) and even to call another Brexit referendum. An inconclusive outcome would mean a higher uncertainty regarding the Brexit.

Johnson's declarations infused optimism on the global markets. By 11:42 GMT the Pound Sterling rose by 0.51 percent against the US dollar, reaching the 1.2965 level. Conversely, it went up by 0.74 percent against the Japanese Yen, at 141.37 , while it increased 0.53 percent against the Swiss franc, at 1.2835.

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.