SMM: the World Trade Organization ((WTO)) released its latest report on Thursday (17 EST). In the second quarter, the index of global trade in services fell to a record low. Nevertheless, WTO believes that fundamentals are still strong and trade in services has a chance to bottom out and rebound.
According to (Services Trade Barometer), the WTO barometer of trade in services, the barometer index of global trade in services fell to 95.6 in the year to June, down from 96.8 in the first quarter, the lowest on record and significantly below the benchmark value of 100, indicating that global trade in services may still be well below expectations.
The growth rate of trade in services has been slowing since the second half of 2019, and the recent contraction in trade in services reflects the slowing pace of global economic growth and the impact of the outbreak of COVID-19.
Although the index is expected to remain below trend in the second half of this year, recovery in areas such as air passenger transport will make a strong contribution to the economy.
There is still resilience in key areas.
The WTO service trade barometer mainly measures service categories such as service PMI, financial services, air transport, container transport and construction, hoping to measure the growth momentum of global trade in services and identify trend turning points.
At present, most of the sub-indices of the index are still below the trend level, but some indicators show signs of bottoming out, indicating a degree of resilience in these areas in the face of outbreaks.
Among them, air passenger transport (49.2) was the hardest hit by the pandemic, reflecting a sharp reduction in travel when the epidemic had not yet been brought under control. The contraction in the sector has been large enough to drag on the total volume of global trade in services, although it seems to have stabilized recently.
However, the Container Shipping Index (92.4), the Construction Index (97.3) and the Global Services Purchasing managers Index (PMI,97.0) showed signs of improvement. The rise in PMI is noteworthy because it is the most forward-looking component of the services barometer.
At the same time, the (ICT) index of communications technology services fell to 94.6, despite strong demand for these services during the pandemic.
As of mid-September, the financial services index recorded 100.3, the only part of the barometer of trade in services that maintained expectations.
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