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Week in Review

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July 12, 2021

Haiti’s future uncertain after brazen slaying of president. An already struggling and chaotic Haiti stumbled into an uncertain future Thursday, reeling from the assassination of President Jovenel Moïse followed by a reported gunbattle in which authorities said police killed four suspects in the murder, detained two others and freed three officers being held hostage. (Business Mirror

G20 to call for global tax deal to be finalized by October. G20 finance ministers are to push for unresolved issues in a proposed global corporate tax overhaul to be ironed out by October, and are urging holdouts to join the deal, according to the latest version of their statement from a meeting in Venice. (Reuters

Zimbabwe’s new high-denomination banknote can’t buy a loaf of bread. The ZW$50 note, worth $0.60 on the prevailing bank rate, is expected to do little to stop rising inflation, stabilize prices, or improve Zimbabwe’s economic prospects. (Quartz

229% surge in China-US shipping costs drives inflation pressure. The cost to ship a boxload of goods to the U.S. from China edged close to $10,000 as the world’s biggest economy keeps vacuuming up imports amid slower recoveries from the pandemic from Europe to Asia. (AJOT

It’s the beginning of the end of easy money. Central banks are starting to tip-toe away from the emergency stimulus they deployed to fight the pandemic-driven global recession. (Bloomberg

Beijing’s regulatory plans could hurt U.S.-listed Chinese companies. A complicated structure that has allowed large Chinese companies to list in the U.S. could be in the crosshairs of China’s regulators, adding another risk for those who invest in China through American Depositary Receipts. (Barron’s

Sri Lanka tightens currency outflows. Sri Lanka's central bank on Sunday further tightened controls on the outflow of foreign currency to combat a growing cash crunch triggered by the coronavirus pandemic. (Global Times

Chaos in Lebanon: How much longer can the military maintain law and order? For how long can the un-paid and deeply suffering Lebanese military remain deployed to maintain law and order? (Global Risk Insights

Liquidity trapped in supply chains hits highest level in a decade, research finds. The amount of cash held up between corporates and their suppliers hit a record high in 2020 as the Covid-19 crisis upended supply chains and stalled consumer demand worldwide, leaving firms with excess inventory levels. (Global Trade Review

French champagne houses cry foul over Russian label rule. Champagne houses in France on Monday issued a plea for diplomatic help over a new Russian law reserving the term “champagne” for Russian-produced sparkling wines, which led to a temporary interruption of supplies from the market leader Moët Hennessy. (EurActiv

‘Overdue’: Biden sets Aug. 31 for US exit from Afghanistan. President Joe Biden says the US military operation in Afghanistan will end on August 31, delivering an impassioned argument for exiting the nearly 20-year war without sacrificing more American lives even as he bluntly acknowledged there will be no “mission accomplished” moment to celebrate. (Business Mirror

Port congestion, labor shortages increasing costs for food shippers. Fluctuating vessel schedules and delays at ports and inland terminals are contributing to rising costs for perishable food shippers across supply chain modes. (JOC

Timeline: How the Suez Canal blockage unfolded across supply chains. The Ever Given was lodged in the canal for six days, blocking hundreds of ships from traversing the waterway. (Supply Chain Dive

The rift between Turkey and Israel continues to deepen. Tensions are rising in the eastern Mediterranean. Turkey’s sparring with Israel is combining with its conflicts with Saudi Arabia and its partners, and is increasingly drawing in other countries—from Libya to Greece, and maybe soon the United States. (Lawfare




USMCA: Atradius Poll Reveals Stark North-South Divide


Differences in how governments have managed the pandemic may be behind contrasting results in this year’s Payment Practices Barometer survey on the USMCA, according to trade credit insurer, Atradius. 

In Mexico, 81% of businesses anticipate growth over the coming year. In Canada, however, this percentage plummets to 36%, while U.S. businesses report a sentiment that falls about halfway between these two extremes. 

“There will be a wealth of reasons behind this dichotomy,” said Gordon Cessford, regional director for Atradius North America. “While the cohort of interviewees may well play a part, it is likely that businesses in each country worked through differing pandemic experiences. In Mexico, a light touch governmental approach to lockdowns meant that many businesses continued to trade without interruption. In Canada, the reverse is true.” 

What’s more, Canada’s central government implemented a raft of support measures for businesses. In Mexico, most business support was driven by local projects and implementation was patchy across different regions.  

“Businesses in Canada and the U.S. may be bracing themselves for the withdrawal of government support packages during the second half of this year,” said Andreas Tesch, chief market officer for Atradius N.V. “Most financial observers predict an uptick in business insolvencies at this point. The pessimism expressed by businesses in Canada is likely to reflect their anticipation of a heightened risk environment.” 

This survey was conducted in Q2 2021, a full year after the World Health Organization declared Covid-19 a global pandemic. In addition to capturing views reflecting business confidence, the survey took the pulse of business health through the key performance indicators of trade credit preferences, payment terms, DSO and credit management. 

In the USMCA region, the survey reveals that more than half of all B2B sales were transacted on credit and 44% of businesses actually increased their use of credit following the outbreak of the pandemic. In terms of the three countries comprising the USMCA region, the U.S. reported the highest percentage of late payments and write-offs. Despite the optimism expressed by businesses in Mexico, the pandemic tops the list of business concerns across the region. In particular, businesses cited the unpredictability of the pandemic alongside safeguarding liquidity levels as their top two concerns. 

The USMCA 2021 Atradius Payment Practices Barometer was conducted in the U.S., Mexico and Canada.  





Taiwan: Covid-19 Has Hit Taiwan,
a Rare ‘Winner’ of the Pandemic Until Now

Raphaël CecchiAnalystCredendo

As the rest of the region, Taiwan has been experiencing its most severe Covid-19 wave. In its attempt to contain the spread of the Delta variant, partial lockdown measures have been introduced, and social distancing measures and travel restrictions have been tightened.  

As vaccination is lagging far behind—with less than 9% of the population having received one vaccine dose—and amid a geopolitical vaccination policy, the U.S. and Japan have already sent millions of vaccine doses to Taiwan. Meanwhile, after a long political honeymoon in 2020, the government is under criticism for its management of Covid-19 and the introduction of various containment measures. President Tsai announced that a domestic vaccine will soon be available. 


Taiwan is no longer a global exception of an open economy without lockdown in the Covid-19 era. It is worth pointing out that the number of deaths remains among the lowest in Asia (and worldwide) and that the number of new daily contaminations has fallen to less than 100 at the end of June. Still, the surge witnessed in Taiwan since May probably shows prevention fatigue, the lack of preparedness for further waves due to complacency and how hard it is to keep the pandemic under permanent control.  

As a result, vaccination appears to be the only way to a potential return to normal life and business activity since the pandemic outbreak. Acceleration of the vaccinations is therefore essential and explains the authorities’ request to Taiwan’s closest partners to obtain the much-needed vaccines. The DPP-led government and Taiwan’s president Tsai Ing-wen are indeed under popular pressure to prevent the pandemic from spreading further and affecting people’s lives.  

Nonetheless, domestic political risks appear to be limited because of the government’s strong majority and due to the fact that the next presidential and legislative elections are only scheduled in January 2024. In the short term, containing Covid-19 is the government’s priority, also to mitigate the pandemic’s economic impact notably on tourism and private consumption.  

The economy, boosted by IT exports since Covid-19 broke out, is indeed hit at the same time by a record-long drought harming the production of semiconductors for which Taiwan is a world leader and an essential supplier to meet the rapidly rising global demand. Hence, strong real GDP growth forecasts of 4.7% in 2021 (after a solid 3.1% in 2020) could be revised downward later this year.  

This being said, exports are expected to be resilient and to continue on their impressive growth path in a context of sustained global demand for technology products and components. Therefore, after very strong electronics exports were recorded until the Covid-19 surge of mid-May, the economic outlook remains positive for the whole year 2021. The good momentum can also be noticed in the largely positive evolution of the Taiwan dollar over the past year.  

Hence, in the coming months, Credendo’s business environment risk is likely to remain stable at a strong B/G. The same optimism applies to the short-term political risk (in 1/7), which reflects the external liquidity situation. Indeed, with its massive and rising foreign exchange reserves that cover 1.5 years of imports and 2.5 times its external debt, Taiwan remains a strong net foreign creditor. 

Reprinted with permission from Credendo


Serious Rifts in OPEC

Chris Kuehl, Ph.D., NACM economist

The Saudi Arabians are working more closely with Russia and that is not sitting well with the other members of OPEC. Russia is not a member of the cartel, but it has been coordinating its policies with OPEC for years.

That coordination has been predominantly through the Saudi Oil Ministry. The Russians do not want to boost production of oil despite the fact prices have hit levels not seen in three years. That position has angered the United Arab Emirates and other Gulf oil states because they want to boost production now to meet this new demand. The rift has become very public, and for the first time since OPEC started in the 1960s, a very real possibility exists that these oil states will pull out and set their own policies.

There are two main reasons for the desire to boost output. These states can still produce oil more cheaply than any other nations, which means they can still profit even with per barrel prices in the $30s. The cartel limits its output so they cannot make as much money as they would like.

These producers are also worried about the entry of marginal producers that wait until the per barrel price is high. They then swoop in and grab market share from the big producers. If the per barrel prices stay in the $60s and $70s, there are fewer of these marginal players. The third reason for this dispute is more geopolitical: These regimes distrust and oppose Russia on many other fronts.


Cash Management - Inputs and Outputs


 Week in Review Editorial Team:

Diana Mota, Editor in Chief and David Anderson, Member Relations