A decline in trade volumes which began in the latter months of 2022 looks set to end, World Trade Organization (WTO) data show, yet weak export orders are dampening prospects of a sustained recovery.

The WTO goods trade barometer, published on a quarterly basis by the intergovernmental organisation, signals changes in world trade growth two to three months ahead of official merchandise trade volume statistics.

The latest score of 99.1 was an improvement on May’s reading of 95.6, yet weak export orders and limited demand for electronic goods meant the barometer remained “below trend”, adding to the gloomy picture for trade.

“Global goods trade showed signs of a turnaround in the second quarter of 2023,” the WTO says. “But further upward momentum in Q3 and beyond may be limited as long as export orders remain weak.”

The export orders index fell to 97.6, having tracked above trend in May. The WTO notes that major markets such as the European Union and China are suffering from “sluggish economic growth”, which is affecting demand.

The electronics components index scored 91.5, well below trend and indicating that makers of laptops, phones and semiconductors will have fared particularly poorly in Q2 2023. This is in keeping with previous data, which showed China’s mobile phone exports plunged by 11% in the year up to May.

The latest report is roughly in line with the most recent WTO forecast for goods trade this year, made in April, which predicted growth in merchandise trade would slow from 2.7% in 2022 to only 1.7% in 2023. But the WTO says even this “subpar” forecast may have to be revised downward unless activity picks up.

“The current results are slightly weaker than WTO’s most recent trade forecast,” the organisation notes. “However, the target is still attainable if trade growth picks up in the second half of the year as expected.”

There were some bright spots in the report, with the container shipping index leaping to 99.5 from 89.4 in May, while air freight increased four points to 97.5. Once again, the automotive industry performed strongly and scored 110 on the back of strong export figures, particularly among Asian carmakers.

“Surging exports of automotive products have contributed to stronger-than-expected GDP growth in Japan in the first half of 2023. Vehicle exports have also been a rare source of strength for the Chinese economy, which has struggled to gain momentum in recent months,” the WTO barometer says.

But broadly, the WTO says any sustained recovery from a slump in trade volumes, which began in late 2022, is “less than certain”.

Trade volumes fell by 2.4% in Q4 2022 from the previous quarter due to several related factors, including the Ukraine war, inflation and tighter monetary policies. Trade volumes continued to fall and dropped by a further 0.3% in Q1 2023.