“Geared segments concluded today in the red, mirroring concerns for the big picture on their balancing levels. On the flip side, gearless segments focused on specific commodity trades and reported weekly gains, anticipating more active weeks in the usual staple iron ore and grain runs.”
After growing 3.1 percent last year, global economy is set to slow substantially to 2.1 percent during the current trading year, amid continued monetary policy tightening to rein in high inflation, according to the World Bank. In 2024, the economy is forecasted to recover tepidly to 2.4 percent. The resilience that global economic activity exhibited earlier this year is expected to fade. Growth in several major economies was stronger than envisaged at the beginning of the year, with faster-than-expected economic reopening in China and resilient consumption in the United States. However, for 2023 as a whole, global activity is expected to decelerate, with a significant expansion in China and a noteworthy softening in advanced economies.
In particular, advanced-economy growth is projected to cut pace to an annual average of 0.7 percent in 2023. This largely reflects the effect of extensive central bank policy rate hikes in the last eighteen months. In the first quarter of 2023, the United States expanded by 1.1 percent on a quarterly basis, supported by broadly robust consumption. Euro area’s product grew by 0.3 percent at an annualized rate, echoing lower energy prices, easing supply bottlenecks, and fiscal policy support. Growth of advanced economies is expected to accelerate modestly to 1.2 percent in 2024 due to a pickup in the euro area.
Expansion of emerging market and developing economies is projected to edge up to 4 percent in 2023, which is almost entirely attributed to the rebound in China. Excluding the world’s second largest economy, growth in developing economies is set to decline to 2.9 percent this year, due to the drag from high inflation and the associated monetary tightening as well as from slowing external demand. Growth in developing economies excluding China is expected to pick up modestly to 3.4 percent in 2024, as the effects of monetary tightening diminish.
Economic activity in China bounced back in early 2023 fuelled by the earlier-than-expected economic reopening. Against this backdrop, China’s growth is projected to rebound to 5.6 percent in 2023, as the economic reopening boosted consumer spending, particularly on domestic services. Investment is expected to pick up only modestly as infrastructure-related stimulus fades, and high debt levels weigh on the property sector recovery. Weak external demand will also have a negative bearing on growth. While the reopening will support services trade, subdued infrastructure and manufacturing sector activity will negatively affect overall trade, as services activity tends to be less trade intensive.
With the reopening effect fading in the second half of the year, growth will slow to 4.6 percent in 2024, as moderating consumption offsets a small pickup in exports.
At the same time as consumer spending was gathering pace, goods trade didn’t manage to follow this trend. In fact, China's imports of major commodities presented a rather mixed picture in May, with increased crude oil and iron ore volumes being offset by softness in copper and signs of a peak in coal. The recently released commodity import data are starting to exhibit the same unevenness that has characterised the recovery in the world's second-largest economy overall. China's iron ore imports rose 4 percent in May to 96.18 million tonnes from a year earlier, as the profitability of Mysteel surveyed steel mills rose to 34.2 percent by the end of May, from 26.41 percent in late April. In sync, China imported a record 12.02 million metric tons of soybeans in May, up 24 percent from a year ago, as cargoes delayed due to recent strict inspections were finally discharged at ports. China's crude oil imports in May rose to the third-highest monthly level on record, as refiners built inventories and stepped up operations following maintenance in April. Crude imports in May totalled 51.44 million tonnes, up 12.2 percent yearon-year, according to data from the General Administration of Customs. Conversely, China's copper imports slid 4.6 percent in May from a year earlier, as soft demand amid a wobbly economic recovery dampened buying appetite. Additionally, Chinese customs cleared 39.58 million tonnes of coal in May, almost double the low base of 20.55 million tonnes a year ago, albeit lower month-onmonth.
With global goods trade growth slowing and China's exports shrinking much faster than expected in May, geared segments concluded today in the red, mirroring concerns for the big picture on their balancing levels. On the flip side, gearless segments focused on specific commodity trades and reported weekly gains, anticipating more active weeks in the usual staple iron ore and grain runs.
