Last troops exit Afghanistan, ending America’s longest war. The United States has completed its withdrawal from Afghanistan, ending America’s longest war and closing a chapter in military history likely to be remembered for colossal failures, unfulfilled promises and a frantic final exit. (Business Mirror)

How special economic zones are reshaping the world economy. Special Economic Zones (SEZs) are reshaping the world economy – yet, no one is paying attention. (HSN)

The world is still short of everything. Get used to it. Pandemic-related product shortages — from computer chips to construction materials — were supposed to be resolved by now. Instead, the world has gained a lesson in the ripple effects of disruption. (NYT)

The crypto craze: China’s ban came none too soon. Despite visible gains for some investors, it may be time to evaluate whether crypto without China is viable. (Forbes)

Venezuela opposition parties will take part in November elections. The opposition parties grouped in the so-called Unitary Platform and led by Juan Guaidó announced a reversal of their stance of boycotting recent votes. (New York Times)

Brexit: food and drink exports to EU suffer ‘disastrous’ decline. Exports of food and drink to the EU have suffered a “disastrous” decline in the first half of the year because of Brexit trade barriers, with sales of beef and cheese hit hardest. (Guardian)

Skepticism grows in El Salvador over pioneering Bitcoin gamble. The country will be first to adopt cryptocurrency as legal tender next month – but economists are sounding warnings over risks. (Guardian)

Taliban focus on governing after American withdrawal. The Taliban reveled in their victory after the American withdrawal from Afghanistan, reiterating their pledge Tuesday to bring peace and security to the country after decades of war. Their anxious citizens, meanwhile, are waiting to see what the new order looks like. (Business Mirror)

Persistent global supply woes to worsen in UK by drivers’ shortage, new trade rules. There is no end in sight to the sharp increases in container costs and delivery lead times that have dogged chemicals supply chains since the pandemic recovery phase began, according to the CEO of the UK’s distributors trade group the Chemical Business Association (CBA). (HSN)

How to manage disruptions in the supply chain. Continuous major market disruptions since 2020 have evolved from linear to complex, and constant change has created chaos in decision making and management strategies. (Shipping Solutions)

For many workers, the return to offices has become ‘The Great Wait.’ It’s costing employers millions. The inundation of delay announcements is a reminder that 18 months into the coronavirus pandemic, the future of the workplace is as uncertain as ever — and employers are spending a lot of money to figure out what to do next. (CNBC)

The quitting economy. More than a year into the pandemic, workers are burnt out and fed up. They’re resigning at record rates. As industries operate at full speed, companies are doing everything they can to entice workers to apply and stay. (Quartz)

Factories hit by pandemic-related supply disruptions. Global factory activity lost momentum in August as the ongoing coronavirus pandemic-disrupted supply chains, raising concerns faltering manufacturing would add to economic woes caused by slumping consumption, surveys showed on Wednesday. (HSN)

Which countries influence the crypto economy? The US leads the way in overall crypto friendliness – but not by as much as you may think. (ZDNet)  

 

 Creditors indicated emerging challenges when doing business in the U.K. due to Brexit, according to a recent FCIB International Credit & Collections Risk Management Survey. Technically the “Brexit transition period” ended last year; however, many credit professionals continue to face obstacles with international trade.

“Brexit could result in entirely new product classifications, tariffs, controls, licensing and more,” Thompson Reuters says. “The burden of managing a complete overhaul in trade regulations is likely beyond your current resources.”

Several FCIB survey respondents noted fear and uncertainty about their customers ability to pay in the U.K. “There are big concerns over what happens to trade with a no deal Brexit,” one respondent said. “This could throw the country into a deeper recession or even depression.”

Other creditors are worried about what the dangerous mixture of COVID regulations and Brexit confusion will do to U.K. customers. “The country is on partial lockdown due to the coronavirus. Many companies are shut down and unable to pay. The economic outlook is uncertain due to the virus and Brexit delays.”

However, some creditors shared their approach to navigating trade disruptions caused by Brexit. One survey respondent emphasized the importance of knowing the history and reputation of your customer, calling this the “foundation of your work” as a credit professional. 

Other respondents strongly recommended credit insurance as “Brexit and Covid-19 challenges continue to create problems for shipments and payments.”

Thompson Reuters recommended the following possible solutions to avoiding Brexit headaches:

• Develop an efficient process for classifying products in both the EU and U.K.
• Analyze supply chain flows to understand country origins for all products and materials.
• Establish documentation controls from suppliers for every step of the production process and each transaction along the way.
• Keep accurate, accessible records for customs audit purposes, including required certifications (e.g., animal health certificates).
• Maintain a robust origin management system to prevent errors and reduce risk.

FCIB members can access the complete results of the August International Credit & Collections Risk Management Collections Survey via The Knowledge & Resource Center; login required. It covers Greece, Italy, Spain and the United Kingdom. Participation in the survey provides members and nonmembers with the results. The International Credit & Collections Risk Management Survey—the only one of its kind in the United States and Europe—allows you to further the collective knowledge of global credit professionals by sharing real-time credit and collection experiences.

 

 

With vaccination campaigns ongoing, the global economy is recovering fully from the major economic downturn in 2020 caused by the Covid-19 pandemic. The 6.2% growth rate is higher than was expected six months ago. 

As most economies have not fully reopened yet, fiscal support is often partially extended in 2021, while monetary support also remains loose, despite rising inflationary pressures. The economic cost of the pandemic will likely be felt at some point, but the pace of the recovery is generally surprising to the upside, certainly among advanced markets with high vaccination rates.

Advanced economies are forecast to grow 5.8% in 2021, more than making up for the cumulative drop in GDP in 2020. Some of the uncertainty that hung over the market last year has disappeared. In the United States, President Joe Biden is expected to follow a more consistent policy than his predecessor did. Furthermore, the Biden administration has implemented several fiscal stimulus bills, boosting GDP growth in the US and elsewhere. The outlook for the United Kingdom is also substantially brighter than it was at the beginning of 2020. Consumers are driving the recovery in the U.K., with strong growth in the hospitality sectors, despite trade growth with the EU falling behind on Brexit and pandemic uncertainties.

Covid-19 infections are rising again in a number of major advanced markets due to the more transmissible Delta variant. However, the health crisis is less acute than it was in 2020, as vaccination programs are preventing higher hospitalization rates. The Delta variant is a larger threat for emerging markets with lower vaccination rates. Emerging markets in Asia had the pandemic relatively well under control, until the Delta variant started to spread in recent months. They have to prevent infections from spreading further, but growth prospects for the region remain relatively strong. Latin America has among the highest infection rates in the world, but benefits from looser restrictions and a robust U.S. recovery.

New virus variants may threaten the recovery

Current forecasts assume governments maintain their grips on the pandemic, and will be able to effectively contain new surges of the virus. Moreover, vaccine rollouts will continue, unhampered by supply constraints. However, if vaccines are less effective against virus variants like Delta than expected, governments may have to re-impose restrictions later this year. This would reduce consumption opportunities and drag on GDP growth in 2021 and 2022.

“It will be a challenge for governments and central banks to navigate a path out of the pandemic,” said John Lorié, chief economist of Atradius. “The recovery prospects look good amid rising consumer demand and fiscal stimulus, but rising inflation indicates there are supply-side issues that need to be overcome. While we expect inflation to revert back to normal levels in 2022, high inflation remains a downside risk, especially if it triggers a forced tightening of monetary policy that would hamper the recovery.”

 

No Deterioration in Payment Terms Despite the Impact of Covid

Nearly two-thirds of the respondents to a survey on corporate payments in Asia experienced payment delays in 2020, according to trade credit insurer, Coface. Coface’s survey provides an overview of the evolution in payment behavior and credit management practices for more than 2,500 companies in the Asia-Pacific region for a year marked by the pandemic. The survey was carried out among companies based in nine markets (Australia, China, Hong Kong, India, Japan, Malaysia, Singapore, Thailand and Taiwan) and active in 13 sectors.

This figure is similar to that recorded in 2019. Despite a sluggish economic environment, the survey conducted by Coface shows that payment terms improved in 2020. Average late payments fell to its lowest level for five years thanks to strong political responses from various governments. Shorter payment terms were thus observed in six of the nine economies studied and in 10 of the 13 sectors. This trend is partly explained by the strong and coordinated measures taken by public authorities to mitigate the impact of the pandemic on economic activity, and by the action of companies which have tightened their credit management and strengthened their Treasury.  

However, credit risks have increased in Australia and Hong Kong, where there has been a sharp increase in late payments. Additionally, these countries experienced a sharp increase in ultra-long payment delays (ULPD, over 180 days) – representing more than 2% of annual turnover. According to Coface's history, in 80% of cases these ultra-long payment delays result in non-honored payment. At the same time, the retail, construction and transportation sectors are among the most affected by the pandemic and have experienced the largest increases in ULPD with more than 2% of their annual turnover –indicating an increase in their treasury risks.

Economic Improvement for 2021: Australian Businesses and Auto Industry Among Most Optimistic

Last year has been characterized by the unprecedented shock of COVID-19 on economies and societies. Historically, recessions are more gradual and superficial than the pandemic-related one which has been rapid and deep due to the unique characteristics of COVID-19.

In the survey, companies were asked about the impact of the pandemic on their business operations. In Japan and Taiwan, it was the decrease in demand that had the most impact on sales levels and business cash flow. In China, rising material prices were the most cited reason. Finally, in India, where many companies use migrant workers, the main reason given was insufficient manpower due to containment measures which disrupted operations.

Thanks to a robust and coordinated policy response, a technological acceleration toward digital use, and the reopening of the economy after strict lockdown measures the recovery has been rapid but uneven. Nonetheless, companies expect economic growth to improve in 2021.

Australian businesses are the most bullish on the outlook with 80% of respondents forecasting higher growth for 2021 – followed by India (76%), China (73%), Malaysia (73%) and Taiwan (71%). Conversely, Japan (61%) is the only country with less than two-thirds of respondents predicting improved economic growth in 2021.

In terms of sector, automotive displays the greatest confidence in sales for the coming year with 66% of respondents predicting an improvement. Next comes energy (64%), metals (64%), paper (63%) and the pharmaceutical industry (61%). The automotive, agri-food and pharmaceutical industries also have the highest proportion of businesses that expect cash flow to improve over the next 12 months (55%) – followed by metals (53%), paper (52%) and chemicals (51%). 

 

 

 

Week in Review Editorial Team:

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