As transportation and communications technology has grown by leaps and bounds over the past 100 years, the world’s economy has shrunk. While the importing and exporting of goods has always been part of most countries’ economies, the Internet and advanced cargo shipping capabilities have changed how countries buy and sell commodities.
Definitions vary somewhat, but a commodity is usually considered to be a raw resource. Food ingredients, oil and gold are all commodities, and these resources are broken down into two or three categories. Hard commodities usually include resources that are mined, and soft commodities include resources that are harvested, such as grain. A third category, energy commodities, is sometimes included in either category, but it is also in its own category.
Exports as a Means to Support GDP
Gross domestic product (GDP) is a measure of a country’s economic health. GDP is made up of a country’s total economic growth or shrinkage during a given period, and in most cases, GDP is measured annually. Commodity exports factor into GDP since they represent a good portion of most countries’ economic activity.
Commodity exports can also be a predictor of GDP growth. Stronger export activity for the year typically means higher GDP. 2023 energy industry predictions for the United States show strong favorability for energy storage investments as government forces push for private enterprises to move toward solar and wind. This may mean fewer energy exports as energy is captured and stored at home.
Upon further examination of 2023 energy industry predictions, data indicates that the conflict in Ukraine will continue to have an impact on energy imports and exports for years, even once a resolution has been reached. The disruption caused by Covid-19 will likely continue to play a part in energy and other commodity exports as well.
Commodity Exports and the Stock Market
Commodity exports are also watched closely by those invested in the stock market. Buying and selling commodity stocks can be a way to make a lot of money, but to be profitable, brokers and investors need to monitor export activity closely to react quickly.
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