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A slump in global goods trade appears to be coming to a gradual end, although geopolitical risks and a “stagnant” European Union economy continue to weigh on demand, World Trade Organization (WTO) research finds. 

The volume of merchandise trade fell by 0.4% and 0.5% year-on-year in the first two quarters of this year respectively, with export orders and electronics sales held back by sluggish performance across major economies. 

But figures for Q3 “should come in slightly stronger thanks to accelerating GDP growth in the United States and China”, the WTO says in its latest goods barometer, which measures the trajectory of trade relative to expected trends. 

The turnaround is attributed to a significant recovery in electronics components trade, which had been weak in the first half of the year, as well as continued strong demand in the automotive sector – likely thanks to a surge in demand for electric vehicles. 

Year-on-year growth is also expected to be “strong” in Q4, as the equivalent figures for 2022 were dampened by high energy prices, rising interest rates and pandemic-related disruptions. 

The findings mark the first time the WTO’s barometer has exceeded its baseline value so far this year, suggesting trade volumes are gradually reverting towards longer-term growth forecasts. 

Its most recent forecast, issued in October, predicts a 0.8% increase in global trade volume for 2023 as a whole. 

However, the organisation warns that “mixed economic results coupled with increasing geopolitical tensions make the near-term outlook highly uncertain”. 

A “stagnant” European Union economy is continuing to drag down global demand, it says, while conflict in the Middle East means risks to the trade outlook “have shifted towards the downside”. 

The WTO’s World Trade Report 2023, published in September, found that geopolitical tensions are increasingly being reflected in an escalation of trade-restrictive measures such as import tariffs. 

Chief economist Ralph Ossa said at the time that “the first signs of fragmentation are emerging”, with countries looking to source goods from countries that are geographically closer or more closely politically aligned. 

The latest WTO barometer also finds raw materials trade has fallen well below trend, which it says is partly due to high interest rates weakening the property market. Export orders and container shipping also remain slightly below trend.