Surging demand for AI-related products has helped drive growth in global goods trade this year, but signs of a slowdown are emerging as the Middle East conflict continues, the World Trade Organization (WTO) has said.
The WTO’s latest goods trade barometer, which measures several key indicators of merchandise flows, has showed that trade in electronic components remained “firmly above trend” over the last six months, which it said was reflective of investment and demand for AI infrastructure.
These trade flows have helped “partly offset” the negative impact of the Middle East crisis, the WTO said.
Overall, the goods trade barometer has remained above its baseline value over the period, suggesting volumes are above trend.
The findings show “signs of resilience” in global goods trade, but suggest growth “may be starting to slow”, the organisation said.
The disruption in the Middle East has continued to reshape trade in both the agricultural and energy markets. Trade volumes for agricultural raw materials have dipped below the WTO’s baseline figure, while export orders, air freight and container shipping are all lower than in January.
Qu Dongyu, director-general of the United Nations Food and Agriculture Organisation (FAO), warned earlier this week that the halt to shipments through the Strait of Hormuz has developed into “a global food security risk”.
The FAO said in a statement that the strait typically carries 20-30% of global fertiliser exports and 50% of sulphur exports, and that the effects on food production “are becoming increasingly visible”.
“Farmers across Asia, Africa and Latin America are grappling with higher production costs and difficult choices regarding fertiliser use and crop decisions,” it said.
Qu urged governments to avoid placing restrictions on agricultural exports, protect humanitarian food corridors and secure alternative logistics routes.
In the energy market, intelligence company Vortexa said in a June 9 report that crude oil flows have continued to rebalance as a result of the drop in supply through the Strait of Hormuz.
It said Asia Pacific imports of crude and condensate rose by 1 million barrels per day in May, despite China’s seaborne imports falling to record lows, as refineries drew down on existing inventories.
The recovery was driven by imports from Saudi Arabia, which has used the East-West pipeline to increase exports from Red Sea terminals, as well as from the UAE’s Fujairah terminals.
India’s crude imports recovered to pre-conflict levels, Vortexa added, supported by record imports from Russia and Venezuela.
Asian refineries outside China and India have increased imports of Atlantic Basin crude, with US exports to the continent reaching a record high last month, it said.
However, international agencies have continued to warn that longer-term demand is likely to outstrip supply if the conflict continues, particularly as oil inventories become increasingly depleted.
The heads of the International Energy Agency, International Monetary Fund, World Bank and WTO issued a joint statement in May warning that inventories were being drawn down “at a record pace”.
“If shipping flows do not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand in the Northern Hemisphere would present increasing risks for fuel security, market conditions, and broader economic resilience,” they said.
