WTO's new trade index suggests sluggish third quarter world trade growth

A truck drives between shipping containers at a container terminal at Incheon port in Incheon, South Korea, May 26, 2016.REUTERS/Kim Hong-Ji

GENEVA (Reuters) - The World Trade Organization on Friday forecast sluggish trade growth in the third quarter of 2016 as it published a quarterly trade barometer for the first time.

The World Trade Organization Index (WTOI) showed a current reading of 99.0, slightly below trend and with a downward tendency in the most recent data, it said.

Readings of above 100 indicate trade growth in line with medium-term trends. World goods trade was 1.0 percent lower in the first quarter of this year than in the first quarter of 2015, the WTO said, so the indicator suggests it may rebound while staying below historical averages.

“The WTOI should provide an early signal if trade is likely to slow or accelerate in the near future. At present it suggests that trade growth will remain weak into the third quarter of 2016,” WTO Director-General Roberto Azevedo said in a statement.

The WTO forecast in April that the global value of trade in goods would grow by 2.8 percent this year, less than a previous forecast of 3.9 percent. The WTO has repeatedly had to lower its expectations because economic forecasts have turned out to be too optimistic.

Trade growth has averaged 5 percent per year since 1990, but has not grown by more than 3 percent since 2011.

The WTOI is based on seven drivers: merchandise trade volume in the previous quarter, export orders, international air freight, container port throughput, car production and sales, electronic components and agricultural raw materials.

Only trade in agricultural raw materials showed a significant upwards movement in the current period, although export orders were also above the trend and picking up. But other elements of the index were weaker, with electronic components trade and car sales especially losing momentum.

Information on the WTOI is availablehere

Reporting by Tom Miles; editing by Mark Heinrich