Treasury News Network

Learn & Share the latest News & Analysis in Corporate Treasury

  1. Home
  2. News

Trade growth to pick up in 2024 despite challenging environment - Industry roundup: 15 April

Trade growth to pick up in 2024 despite challenging environment

The latest edition of the World Trade Organization’s (WTO’s) “Global Trade Outlook and Statistics” report foresees a gradual world merchandise trade volume recovery in 2024 and 2025. This follows a contraction in 2023 driven by the lingering effects of high energy prices and inflation in advanced economies, particularly in Europe. 

“Specifically, we expect merchandise trade to grow by 2.6% in 2024 and 3.3% in 2025 after falling by 1.2% in 2023,” said Ralph Ossa, Chief Economist, WTO. “However, there is a downside risk due to regional conflicts, geopolitical tensions and economic policy uncertainty.”

In value terms, merchandise trade fell 5% in 2023 to US$ 24.01 trillion, but the decline was offset mainly by a 9% increase in commercial services trade,  which reached around US$7.54 trillion. Total goods and services trade was only down 2%. A particularly bright spot for services was the global exports of digitally delivered services, which reached US$4.25 trillion in 2023, up 9% year-on-year, accounting for 13.8% of world exports of goods and services. The value of these services - meaning services delivered digitally across borders through computer networks, and encompassing everything from professional services to streaming of music and videos, and including remote education - surpassed pre-pandemic levels by over 50% in 2023.

Regarding merchandise trade volume, most of the decline between 2022 and 2023 was driven by Europe, which subtracted 1.7 percentage points from global import growth and reduced global export growth by 1.0 percentage points.

Looking ahead, the WTO expects all regions to contribute positively to export and import growth in 2024. In particular, Asia is expected to add around 1.3 percentage points to global export growth and 1.9 percentage points to global import growth in 2024. However, regional conflicts and geopolitical tensions could limit the extent of the trade rebound by causing further price spikes in food and energy prices. For example, although the Suez Canal disruptions stemming from the Middle East conflict have been relatively limited so far, some sectors, such as automotive products, fertilisers and retail, have already been affected by delays and freight cost hikes.

It also appears that geopolitical tensions are beginning to affect trade patterns, with 30% less growth in bilateral trade between the US and China than in their trade with the rest of the world since 2018. Moreover, trade between hypothetical blocs of geopolitically aligned countries has been growing 4% more slowly than trade within blocs since the beginning of the war in Ukraine.

“However, while the trade environment is clearly challenging, we should not paint too dark a picture of international trade,” added Ossa. “The volume of world merchandise trade was essentially flat throughout 2023, and the 1.2% decline in 2023 is relative to 2022. In fact, it was up 6.3% compared to the pre-pandemic peak in the third quarter of 2019, and up 19.1% compared to 2015. These figures emphasize the resilience of international trade.”

Trade growth in 2023 was unusually weak compared to real GDP growth at market exchange rates, which only slowed to 2.7% in 2023 from 3.1% in 2022. It is expected to remain stable over the next two years at 2.6% in 2024 and 2.7% in 2025. The WTO believes that inflation was an essential driver of this. Higher prices depressed real household incomes and eroded the net revenues of firms in 2023, reducing demand for manufactured goods, which feature disproportionately in international trade. Europe was hit especially hard by the rising cost of energy since the start of the war in Ukraine, due to its dependence on imported natural gas. 

Even so, inflationary pressures are expected to abate this year, allowing real incomes - particularly in advanced economies - to grow again. This should boost the consumption of manufactured goods. A recovery in the demand for tradable goods in 2024 is already evident from new export orders, which points to improving conditions for trade. Easing inflationary pressures and eventual reductions in interest rates should gradually lift consumption and raise import demand in 2024 and 2025.


Kyriba adds AI features to enhance liquidity performance

Kyriba has announced new AI features within its platform. These are designed to improve cash forecasting, bank connectivity-as-a-service and custom report generation. This AI product expansion complements existing AI capabilities for payment fraud detection and cash management optimisation.

Cash forecasting is one of the new features. Kyriba customers can create new cash forecasts from historical cash flows with the flexibility to learn from seasonality and other data patterns to increase forecast accuracy and confidence. Building upon the tech company’s existing Cash Management AI tool, the Cash Flow AI offers treasury teams a new tool to incorporate more advanced data into their forecasting processes.

Corporate customers can also use GenAI to update current Kyriba payment formats, including ISO 20022, the standard for financial messages that enables interoperability between financial institutions, market infrastructures and the banks’ customers, to meet the unique requirements of their banking partners without customisation or third-party implementation. This is designed to accelerate time-to-market and reduce the total cost of ownership for payments and ERP to Bank connectivity projects.

Custom reporting is another new feature. Kyriba’s Open Reports Studio integrates with Microsoft Office Copilot to use natural language to query data, build charts and dynamically format custom reports and data insights with complete automation. The real-time integration enables users to incorporate Kyriba data into AI-empowered reporting automatically. This should allow corporates to free up time and reduce the risk of mistakes while making an accurate report.

“There is no AI strategy without a data strategy and through our bank connectivity and OpenAPI platform, Kyriba has built the foundation for our customers to harness their data and integrate AI into treasury, payments and working capital decisions,” said Bob Stark, Global Head of Market Strategy, Kyriba. “ChatGPT and GenAI advancements have helped us leap forward to deliver meaningful AI solutions for the office of the CFO.”


Goldman Sachs backs two Fed cuts in 2024 instead of three

US inflation ran hotter than expected last month. The March core consumer price index (CPI) rose 0.36%, which was 6 basis points above consensus expectations and matched its February pace. The year-on-year rate was unchanged at 3.8%, thwarting expectations that it would decline.

Some parts of the report were not as strong, according to Goldman Sachs Research (GSR). For example, primary rent inflation slowed somewhat. However, the strength in car repair and apparel prices will boost personal consumption expenditures (PCE) prices.

GSR economists now forecast the US Federal Reserve to cut rates in July instead of June. They still expect cuts at a quarterly pace after that, which now implies two cuts in 2024, in July and November.


Standard Chartered, KPMG and UNDRR launch adaptation and resilience financing roadmap

Standard Chartered, KPMG, and the United Nations Office for Disaster Risk Reduction (UNDRR) are calling for a step-change in mobilising finance for adaptation and resilience ahead of COP29, particularly in emerging markets. The three have launched a roadmap designed to galvanise and align sector-wide efforts to address the significant finance shortfall in adaptation and resilience.

The Guide for Adaptation and Resilience Finance, developed with support from more than twenty leading financial institutions, multilateral development banks (MDBs) and NGOs – including the African Development Bank and the United Nations Environment Programme Finance Initiative – represents a practical tool for investors, commercial banks, and other financial institutions by:

  • Setting out a common reference for adaptation and resilience alongside a list of financeable adaptation and resilience themes and activities, forming a classification framework.
  • Simplifying the decision-making process when financing adaptation and resilience through principles and guidance based on the latest best practice definitions and frameworks.
  • Identifying priority investments and their co-benefits, including emissions reductions and nature protection and conservation, alongside adaptation and resilience benefits.

The Guide maps over 100 investable activities across adaptation and resilience, including: climate-resilient crops, vertical farming, natural flood protection, water conservation and efficiency measures, public hospital infrastructure investment, renewable energy storage solutions, and mangrove conservation and replanting.

Research conducted by Standard Chartered, published in the Bank’s Adaptation Economy Report, found that for every US$1 spent on adaptation this decade, an economic benefit of US$12 could be generated. This highlights the significant economic payoff of early action towards adaptation and the potential gains for investors.

“Finance and investment for adaptation and resilience needs to rapidly scale to address a critical shortfall amid rising demand,” said Marisa Drew, Chief Sustainability Officer, Standard Chartered. “We need to embed adaptation and resilience into financial decision-making, to ensure we understand and manage the financial risks and recognise the potential of adaptation and resilience as investable asset classes.”


ESAs exercise to prepare industry for DORA implementation

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have announced that they will launch in May the voluntary exercise for the collection of the registers of information of contractual arrangements on the use of information communication technology (ICT) third-party service providers by the financial entities. Under the Digital Operation Resilience Act (DORA), starting in 2025, financial entities will have to maintain registers of information regarding their use of ICT third-party providers. In this dry-run exercise, this information will be collected from financial entities through their competent authorities and will serve as preparation for the implementation and reporting of registers of information under DORA.

The ESAs and the competent authorities are introducing this voluntary exercise to help financial entities prepare for establishing their register of information, gathering the relevant information specified in the ESAs’ final draft Implementing Standards on the registers of information and reporting their registers of information to their respective competent authorities, who will, in turn, provide those to the ESAs. 

Financial entities participating in the dry run will receive support from the ESAs to (1) build their register of information in the format as close as possible to the steady-state reporting from 2025, (2) test the reporting process, (3) address data quality issues, and (4) improve internal processes and quality of their registers of information.

As part of the exercise, the ESAs will provide feedback on data quality to participating financial entities, return cleaned files with their information register, organise workshops and respond to frequently asked questions. 

The ad-hoc data collection is expected to be launched in May 2024 with the financial entities expected to submit their registers of information to the ESAs through their competent authorities between 1 July and 30 August. 


HighRadius launches B2B payments platform

HighRadius has announced it is launching a B2B payments platform that aims to improve payment processes across over 100 payment methods globally. The platform encompasses a trio of products: Payment Gateway, Surcharge Management, and Interchange Fee Optimizer, all integrated to elevate financial efficiency.

Companies want to make it easier for their customers to make payments globally. The emergence of regional payment methods and the high cost of processing credit cards are significant challenges in this digitalisation journey. In response to this growing demand for cost-effective B2B payment solutions, the HighRadius platform supports more than 150 currencies from various digital commerce channels like e-commerce and order management platforms.

Companies pay the processor a 1.5-3% interchange fee when accepting payments made via credit card, for example. The interchange fee depends on the type of data sent to the processor, which varies across card providers. The Interchange Fee Optimizer module has been designed to automatically populate any missing data, adhering to pre-configured rules, thereby ensuring the attainment of the lowest possible interchange fees.

As part of the solution, HighRadius has also introduced a Surcharge management module that addresses the practice of ‘surcharging’, a legally permissible means of passing a portion of the processing fee to the buyer. Operating in real-time, this module empowers companies to validate surcharge applicability and pass on interchange fees to their buyers. The solution aligns with regional regulations, which differ on a state/province level and among various card brands.


Nuvei launches financing service to unlock merchant cash flow

Nuvei Corporation has launched its Invoice Financing services, which have been integrated into several enterprise resource planning (ERP) platforms, including Sage and Acumatica. This service enables merchants to access Nuvei’s Invoice Financing solutions directly within their ERP systems to optimise cash flow and unlock working capital more efficiently.

Nuvei’s Accounts Receivable Automation suite is built with the intent of helping customers manage and improve days sales outstanding (DSO). The launch of Invoice Financing represents an off-balance sheet extension of this solution, aiming to provide new and existing customers with a high degree of certainty to same day or next day cash.

The Nuvei solution enables businesses to expedite payments from any customer invoiced through their ERP. It is also designed to ensure that businesses receive the cash they need promptly and benefit from favourable rates made available by existing payment transaction data.


Oracle introduces AI-powered cloud service for banks to mitigate AML risks

Oracle Financial Services has introduced Compliance Agent. The AI-powered cloud service aims to enable banks to run inexpensive, hypothetical scenario testing to adjust thresholds and controls to sort through transactions, identify nefarious activity, and meet compliance requirements more effectively.

Part of Oracle Financial Services' portfolio of anti-money laundering (AML), financial crime, and compliance solutions, Compliance Agent is designed to help financial institutions more cost-effectively holistically assess and optimise the performance of their transaction monitoring systems (TMS) and gather empirical evidence to support business decisions. 

The service aims to support banks in assessing the risk profile of new banking products, proactively assessing and mitigating risks from high-risk typologies, and making cheaper, faster, and evidence-supported decisions about risk modelling.


Tabs secures US$7m seed funding to advance AI-powered B2B AR platform

Tabs, an accounts receivable (AR) platform for B2B businesses, has announced a US$7m seed funding round led by Lightspeed Venture Partners. This brings the company’s total amount raised to US$12m, including a pre-seed round from Primary Ventures. The investment will fuel Tabs’ mission to reimagine B2B AR processes at a time when many businesses struggle to collect cash and find profitability. In a statement, Tabs said that 55% of B2B invoices in the US are currently overdue, tying up trillions in capital for small and medium businesses.

At the heart of Tabs’ solution is Tabs AI, a proprietary platform built to understand and extract B2B contractual elements. Using this information, Tabs then automates contract ingestion, invoicing, and payments, streamlining a company’s accounting process. The platform’s customers, such as Findigs, Pinata, and Inspiren, report seeing a 40% reduction in time to collect, mainly driven by avoiding manual work associated with calculating invoices. This also enables them to take advantage of market opportunities with pricing changes, usage models, and greater sales flexibility.

“Tabs is the only software we saw that could fully automate our complex billing and remittances process,” commented said Sebastian Hart, Director of Finance & Business Development at Findigs, a digital underwriting platform. “With Tabs, our finance team is able to spend less time on billing and remittances, and spend more time on work that grows the business.”

Like this item? Get our Weekly Update newsletter. Subscribe today

Also see

Add a comment

New comment submissions are moderated.