Global goods trade was expected to pick up gradually this year following a contraction in 2023 that was driven by the lingering effects of high energy prices and inflation, WTO economists said in a new forecast this month.
The volume of world merchandise trade could increase by 2.6% in 2024 and 3.3% in 2025 after falling 1.2% in 2023, the WTO said in its prediction. However, regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the forecast.
INFLATION SEEN ABATING
In the report, WTO economists noted that inflationary pressures were expected to abate this year, allowing real incomes to grow again — particularly in advanced economies — providing a boost to the consumption of manufactured goods. A recovery of demand for tradable goods in 2024 was evident already, with indices of new export orders pointing to improving conditions for trade at the start of the year.
High energy prices and inflation continued to weigh on demand for manufactured goods, resulting in a 1.2% decline in world merchandise trade volume for 2023, the WTO said. The decline was larger in value, with merchandise exports down 5% to $24.01 trillion.
Trade developments on services were more upbeat, with commercial services exports up 9% to $7.54 trillion, partly offsetting the decline in goods trade, the WTO said.
Import volumes were down in most regions but especially in Europe, where they fell sharply, the report said. The main exceptions were large fuel-exporting economies, whose imports were sustained by strong export revenues as energy prices remained historically high.
DOWNSIDE RISKS
The report warned that geopolitical tensions and policy uncertainty could limit the extent of a trade rebound. Food and energy prices again could be subject to price spikes linked to geopolitical events.
The report’s special analytical section on the Red Sea crisis noted that while the economic effect of the Suez Canal disruptions stemming from the Middle East conflict had so far been relatively limited, some sectors, such as automotive products, fertilizers and retail, have been affected by delays and freight costs hikes.
The report furthermore presented new data indicating geopolitical tensions had affected trade patterns marginally but have not triggered a sustained trend toward de-globalization.
Moreover, for 2023, global trade in non-fuel intermediate goods, which provides a useful gauge of the status of global value chains, was down 6%.
Signs of fragmentation also may be emerging in services trade. Fragmentation of data flow policies along geopolitical lines could cause global trade of goods and services to fall by 1.8% and global GDP to decline by 1%.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $181.98 per cwt to $186.06, compared with last week’s range of $182.00 to $185.81 per cwt. FOB dressed steers, and heifers went for $286.81 per cwt to $290.32, compared with $287.22 to $292.58.
The USDA choice cutout Tuesday was up $1.47 per cwt at $297.40 while select was up $0.89 at $292.76. The choice/select spread widened to $4.64 from $4.06 with 117 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $345.56 per cwt, and 50% beef was $86.38.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.43 to $1.53 a bushel over the May corn contract, which settled at $4.43 a bushel, up $0.03 1/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $243.22 per cwt, up $1.11. This compares with Tuesday’s Apr contract settlement of $243.75, up $0.85 and May’s $246.05, up $0.87.