Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
The global economy is interconnected, and understanding the financial challenges faced by the world’s poorest nations is crucial for traders looking to navigate today’s markets.
The World Bank’s 2024 report highlights the 26 poorest countries, outlining the severe economic hardships they face and how these struggles impact global trading. From high debt levels to natural disasters and conflicts, these nations are vulnerable to multiple risks that shape global market trends.
This article delves into these countries’ economic challenges, their global significance, and why they matter to traders.
The 26 poorest countries: An overview
The 26 poorest countries, as identified by the World Bank, are classified as low-income economies with a gross national income (GNI) per capita of USD 1,135 or less. These nations are home to some of the world’s most vulnerable populations and face severe financial difficulties. They rely heavily on International Development Association (IDA) funding, a critical financial lifeline that helps sustain their economies.
These countries, many of which are located in sub-Saharan Africa and South Asia, face persistent poverty, political instability, and are largely dependent on commodities exports such as agriculture, metals, and oil. Their reliance on commodities makes them highly susceptible to global market fluctuations, and the lack of economic diversification only amplifies the effects of price volatility.
Furthermore, these countries are more affected by economic shocks than the rest of the world, especially as they struggle to recover from the impacts of the COVID-19 pandemic. While most countries have resumed growth, these low-income nations have continued to fall behind, further deepening the gap between them and wealthier economies.
Key economic challenges
The economic challenges faced by these countries are multifaceted and deeply entrenched. Three major issues dominate their economic landscape: debt, natural disasters, and political instability.
1. Debt: The average debt-to-GDP ratio for these countries stands at 72%, the highest level in 18 years. Many of these nations are either in debt distress or at high risk of it. Their dependence on IDA grants and low-interest loans has become critical, as market financing options have largely dried up. This level of indebtedness constrains their ability to invest in infrastructure and development, limiting economic growth and perpetuating cycles of poverty.
2. Natural disasters: Natural disasters pose a significant threat to these economies, causing annual GDP losses of approximately 2%, which is five times higher than the average in lower-middle-income countries. These countries are particularly vulnerable to climate change, and their limited financial capacity hampers efforts to build disaster resilience. This repeated damage to infrastructure and agriculture places additional strain on their already struggling economies.
3. Conflict and fragility: Two-thirds of the 26 poorest countries are either in active conflict or face institutional fragility, which discourages foreign investment and economic development. The inability to maintain order and stability means that many potential investors are deterred by the risks associated with political instability and armed conflict. This fragility also stifles efforts to improve governance, further limiting their chances for sustainable growth.
The role of the International Development Association
The International Development Association, a branch of the World Bank, provides grants and low-interest loans to support low-income countries.
Over the past five years, the IDA has focused on the 26 poorest nations, raising a record USD 93 billion in 2021 and aiming for USD 100 billion by 2024.
This aid helps stabilise economies facing challenges such as debt, political instability, and natural disasters. However, it also highlights the need for long-term solutions to reduce their reliance on international aid.
Impact on global markets and traders
For traders, understanding the economic struggles of these nations is not just about global awareness—it’s essential for risk management. The interconnectedness of the global economy means that the challenges faced by these countries can have ripple effects in global commodity markets.
Many of the 26 poorest countries are key exporters of commodities such as oil, metals, and agricultural products. When political instability, debt crises, or natural disasters disrupt production, it can lead to price fluctuations in the global markets. For example, a conflict in a major oil-producing low-income country can tighten global oil supplies, causing prices to spike. Similarly, droughts or floods in agricultural nations can lead to significant disruptions in the supply of key commodities, affecting global prices and trade volumes.
Traders, especially those involved in commodity trading, need to stay informed about the political and economic developments in these countries to manage their portfolios effectively. By doing so, they can anticipate market movements and make more informed decisions when trading affected commodities.
Recommendations for economic recovery
The World Bank report provides several recommendations for helping these nations overcome their economic challenges. While external support, such as IDA funding, remains critical, these countries must also implement internal reforms to improve their economic prospects.
1. Tax reforms: Simplifying taxpayer registration and improving tax administration are essential steps for these nations to increase revenue. This would create additional fiscal space for governments to invest in infrastructure, education, and healthcare, all of which are critical for long-term economic development.
2. Public spending efficiency: Improving the efficiency of public spending is another crucial reform. By allocating resources more effectively, these countries can make better use of their limited funds, particularly in areas such as disaster resilience, infrastructure, and social services.
3. Economic diversification: Reducing reliance on commodity exports is necessary for building more resilient economies. By investing in other sectors such as manufacturing, services, and technology, these countries can create new avenues for growth and reduce their exposure to global commodity price volatility.
Conclusion
The economic struggles of the world’s poorest countries are not isolated issues—they are deeply connected to the global economy and have significant implications for traders. For those looking to manage risk in commodity markets, staying informed about the economic health of these countries is essential.
Ready to explore new trading opportunities and stay ahead of global market trends? Open a live account with VT Markets today and access expert insights, cutting-edge tools, and a world of trading opportunities that allow you to make informed decisions in a complex global economy.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Written on October 15, 2024 at 10:48 am, by anakin
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
To provide a favorable trading environment to our clients, VT Markets will modify the trading setting of all share CFDs on Oct 14, 2024:
1. All US Shares products leverage will be adjusted to 20:1.
2. MT5 All Shares products: New positions opened within 30 minutes before market closing and after market opening will start with a leverage of 5:1. After the mentioned period, the leverage will be resumed to original leverage and will not be adjusted back to 5:1.
MT4 will not be affected.
The above data is for reference only; please refer to the MT4 and MT5 software for specific data.
Friendly reminders:
1. All specifications for Shares CFD stay the same except leverage during the mentioned period.
2. The margin requirement of the trade may be affected by this adjustment. Please make sure the funds in your account are sufficient to hold the position before this adjustment.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
As of October 2024, the oil market remains highly volatile, with Brent crude futures dipping 0.8% to USD 76.58 per barrel, and West Texas Intermediate (WTI) down 0.5% at USD 73.24 per barrel. These fluctuations reflect a delicate balance of supply, demand, and economic uncertainty, particularly influenced by geopolitical tensions in the Middle East and a weak global economic outlook.
Recent swings in the market, such as a sharp increase in US crude inventories by 5.8 million barrels—far exceeding the expected 2 million—have placed downward pressure on prices. Meanwhile, OPEC+ production strategies and escalating Middle East tensions have fuelled price instability.
In this dynamic environment, understanding the forces behind these price movements is crucial for traders looking to navigate the market. This article delves into the latest trends, key factors influencing oil prices, and what lies ahead.
Factors influencing oil prices
Understanding the key drivers of oil prices is essential for any trader. On the supply side, OPEC+ production decisions remain a critical factor. The group’s recent agreement to delay a planned oil output increase of 2.2 million barrels per day (bpd) has provided some support to prices. However, growing production from non-OPEC countries is putting downward pressure on prices.
Demand-side factors are equally important. The US Energy Information Administration (EIA) has downgraded its demand forecast for 2025 due to weakening economic activity in China and North America. This has contributed to bearish sentiment in the market.
Geopolitical tensions, especially in the oil-rich Middle East, can cause rapid price movements. Speculation of a strike on Iran is estimated to be worth about USD 5 a barrel in the current market price. Natural disasters, like hurricanes affecting US oil infrastructure, can also disrupt supply and impact prices. For example, Hurricane Milton’s approach to Florida caused about a quarter of fuel stations to sell out of supplies, temporarily supporting crude prices.
Lastly, market speculation and positioning play a crucial role. Currently, there’s a record number of short positions in the market, which could lead to price volatility if these positions are unwound rapidly.
Oil price forecasts
Looking ahead, oil price forecasts for 2025 vary. Citi expects prices to average around USD 60 per barrel if no further OPEC+ cuts are made. Traders from Gunvor and Trafigura foresee a range of USD 60-70 per barrel, mainly due to weak demand from China and global oversupply.
However, UBS projects Brent could rise above USD 80 per barrel, citing tight supply despite lower demand from China. These mixed forecasts reflect ongoing uncertainty, with institutions like the EIA predicting US oil demand at 20.5 million bpd in 2025, slightly below earlier expectations. OPEC and IEA forecasts also show divergence, highlighting the unpredictability of market conditions.
Supply and demand dynamics
Global oil production has reached record highs. The IEA estimates supply will grow by 770,000 bpd this year, reaching a total of 103 million bpd, with further growth expected in 2025. Leading producers like the US, Canada, Guyana, and Brazil are driving this increase. Additionally, spare production capacity, particularly in the Middle East, adds potential for further supply if needed, potentially putting more pressure on prices.
While oil consumption continues to rise globally, the demand outlook varies by region. Asia’s emerging economies are leading the increase in demand, but long-term growth could be constrained by the shift toward electric vehicles and renewable energy, limiting oil’s future demand growth.
Practical tips
1. Stay informed about OPEC+ decisions: OPEC+ meetings can significantly impact oil prices. Keep track of announcements regarding production levels to anticipate market movements.
2. Monitor US crude inventory reports: The weekly reports from the Energy Information Administration (EIA) provide insights into supply and demand. Sudden changes in inventory can cause immediate price fluctuations, so be aware of expectations versus actual figures.
3. Use reliable news sources: Follow reputable news outlets to stay updated on geopolitical events and economic developments affecting the oil market. Avoid making decisions based on unverified information or rumours.
4. Utilise technical analysis tools: Leverage tools like moving averages and RSI (Relative Strength Index) to identify potential entry and exit points. This can enhance your ability to make informed trading decisions.
5. Assess your risk tolerance: Understand your risk tolerance and set stop-loss orders to manage potential losses effectively. This helps protect your capital while allowing for participation in the market.
6. Create a trading plan: Develop a clear trading plan outlining your strategies, goals, and risk management rules. This will keep you disciplined and focused.
Implications for traders
The current oil market presents both risks and opportunities. The potential for price volatility means traders need to be vigilant and prepared for rapid market movements. Key indicators to watch include OPEC+ compliance with production quotas, US shale oil production figures, and economic data from major oil-consuming countries.
It’s crucial to remember that oil prices can be influenced by factors beyond simple supply and demand dynamics. Geopolitical events, currency fluctuations, and broader market sentiment can all play a role in price movements.
For instance, the EIA has lowered its forecasts for oil prices, now expecting US crude oil to average around USD 76.91 per barrel in 2024, a 2.4% cut on its prior forecast, while Brent prices are expected to average USD 80.89 per barrel this year, 2.3% lower than the previous forecast.
Conclusion
The oil market remains a challenging but potentially rewarding arena for non-professional traders. By understanding the key factors influencing prices, staying informed about market developments, and adopting a disciplined approach to trading, it is possible to navigate these turbulent waters successfully. Remember, in the world of oil trading, knowledge truly is power.
If you are ready to apply what you have learned, consider opening a live account with VT Markets. Their platform provides the tools and resources to help you trade oil confidently, potentially capitalising on market movements. Success in oil trading comes from continuous learning and careful risk management. Stay informed and trade wisely.
Sydney, Australia, 10 October 2024 – VT Markets, a leading global financial services provider, today announces the launch of its Client Fund Insurance. With a coverage of up to US$1,000,000 for all eligible clients, the initiative is an extension of the award-winning brokerage’s commitment to safeguarding client funds.
The insurance policy will automatically cover both new and existing clients at no additional cost, ensuring enhanced protection for eligible clients in the rare event of financial insolvency.
Key highlights of the insurance policy: • Coverage of up to US$1,000,000 per client. • Automatic application for all eligible clients globally. • No additional cost to clients, comprehensive protection against insolvency risks. • Further solidifies VT Markets’ position as a trusted and transparent broker.
“Our clients’ trust is paramount to us, and this insurance policy is a key step towards reinforcingthat trust,” said Ludovic Moncla, Head of Strategic Operations EMEA of VT Markets. “We wantevery trader on our platform to feel secure, knowing their funds are protected with the higheststandards of security and trust in the financial markets. This initiative is part of our ongoingmission to create the safest possible trading experience.”
VT Markets has earned a strong reputation for its focus on transparency, regulatory compliance, and superior service delivery. The new US$1,000,000 insurance coverage is designed to boost confidence among traders and investors, ensuring that they are well protected as they engage with global financial markets.
VT Markets’ Client Fund Insurance is arranged by Willis Towers Watson and underwritten by syndicates at Lloyd’s of London.
For more information about VT Markets and its new insurance offering, please visit our website or contact our customer support team.
About VT Markets
VT Markets is a regulated multi-asset broker with a presence in over 160 countries as of today. It has earned numerous international accolades including Best Online Trading and Fastest Growing Broker. In line with its mission to make trading accessible to all, VT Markets offers comprehensive access to over 1,000 financial instruments and clients benefit from a seamless trading experience via its award-winning mobile application.
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