Services trade activity likely to weaken, with growth slowing in major economies

According to the latest results of the WTO Trade in Services Barometer, released on 22 December, global services trade activity appears to have weakened during the fourth quarter of 2022. It is likely to remain subdued through the first months of 2023. , as the post-pandemic recovery has been held back by slower growth in major economies.

Merchandise Trade Barometer trade

The Barometer index reading for October fell to 98.3, slightly below its reference value of 100 and well below the previous reading of 105.5 since the last release, which had a place in June. The findings are in line with the Merchandise Trade Barometer, released at the end of November, which indicated a slowdown in merchandise trade volume growth in the coming months of 2022 and 2023.

Finally, the volume of world trade in services surpassed its pre-pandemic peak in the second quarter of 2022 and is forecast to remain robust in the third quarter, driven by spending on travel-related services, technology services information and communications (ICT), and financial services. Rather, however, the Barometer indicates that year-on-year growth in real commercial services began to moderate in the third quarter and may slow further in the fourth, as well as in the new year, due to declining growth prospects in the major service industry economies.

Barometer component

Among the Services Barometer component indices, financial services (107.8) were most resilient to the slowdown in the global economy, holding firm above trend. Indices for air passenger transport (105.2) and ICT services (103.2) also finished above the trend, although the passenger index has fallen back close to its benchmark of 100, representing an expansion of the trend.

Contrary to these positive signals, the component indices for construction services (92.9), container shipping (92.8), and the purchasing managers’ index for services (91.1) slumped to contraction ground.

The Services Trade Barometer highlights turning points and changing patterns in global trade in services. Contrary to its equivalent in the area of ​​goods, the services indicator registers fluctuations that coincide with the movements of real trade flows, it does not anticipate them. Indices out of 100 show growth in line with medium-term trends. Indices above 100 indicate above-trend growth, while indices below 100 indicate the opposite.

 

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