CEM REPORT | World services trade has continued to exhibit recovery from the COVID-19 pandemic set back despite the economic impact from Russia – Ukraine conflict which sent waves through all economies across the globe
The Services Trade Barometer reading released Thursday 23 June 2022, by the World Trade Organization (WTO), shows a continued growth of the World services trade into the second quarter of 2022. This indicate resilience to the conflict in Ukraine.
According to WTO, the latest reading of 105.5 is firmly above the previous reading of 102.5 in September 2021 and comfortably over the baseline value of 100 for the index, signalling that services trade is likely to post sustained gains in the second quarter once official statistics for the period are available.
The Services Trade Barometer is outpacing the Goods Trade Barometer, which points to a possible shift in consumption patterns away from goods and back toward services as the COVID-19 pandemic eases.
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The passenger air transport index (117.1) registered the strongest gain among the Services Trade Barometer’s component indices, contributing to the above-trend reading in the global index. Strong showings in the services Purchasing Managers’ Index (105.1) and information and communication technology services (104.2) also helped lift the services barometer reading.
While it remains above trend, the financial services index (101.7) appears to have lost momentum recently, possibly due to sanctions on the Russian Federation in connection with the conflict in Ukraine. Other indices including container shipping (101.5) and construction (101.1) remain slightly above trend.
The Services Trade Activity Index has shown slow but steady growth since services trade bottomed out in the second quarter of 2020 in the early stages of the global pandemic. The index continued to move towards recovery in the fourth quarter of 2021 with a 15.6% year-on-year increase, although it remained 8.9% below its pre-pandemic peak in the second quarter of 2019.
Services Trade Activity Index provides an approximate measure of the real volume of world services trade accounting for changes in prices and exchange rates.
The Services Trade Barometer highlights turning points and changing patterns in world services trade. Unlike its counterpart for goods, the fluctuations registered by the services indicator coincide with movements in actual trade flows, rather than anticipating them. Readings of 100 indicate growth in line with medium-term trends. Readings greater than 100 suggest above-trend growth while those below 100 indicate the opposite.
