Week in Review

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US and Russia try to lower temperature in Ukraine crisis. The United States and Russia sought to lower the temperature in a heated standoff over Ukraine, even as they reported no breakthroughs in high-stakes talks on Friday aimed at preventing a feared Russian invasion. (AP News)

British trade with Ireland slumps following Brexit. Goods exports from Great Britain to Ireland have dropped by 20% since the United Kingdom left the single market, according to data published on Monday by Ireland’s Central Statistics Office. (EurActiv)

One of China’s busiest ports jammed by coronavirus and global ship delays. Containers are stacking up at the already backed-up Shenzhen port in China as congestion in the US and Europe ripples back to Asia, delaying ships picking up goods from the manufacturing and technology hub. (Business Mirror)

Commodity traders ‘face year of uncertainty’ despite oil price surge. Soaring oil prices are not necessarily good news for large commodity trading houses hoping to replicate last year’s record profits, experts believe. (GTR)

Non-residents will now have to pay in foreign currency in Sri Lanka, says central bank. The directives were taken by the Central Bank of Sri Lanka with a view to strengthening macroeconomic stability. (Deccan Herald)

Surging gasoline costs unsettle Asia as inflation poses challenge. Surging gasoline prices are posing a tricky new problem for governments as they seek to nurse virus-hit economies back to health. (Business Mirror)

Upcoming EU due diligence laws should apply to ECAs, campaigners say. A planned European Union law requiring large and businesses and financial institutions to conduct human rights and environmental due diligence should also apply to export credit agencies (ECAs), activists say. (GTR)

Is North Korea reopening its China border for much-needed trade? The appearance of two North Korean freight trains in the Chinese border city of Dandong has given rise to speculation that Pyongyang may be cracking open its frontiers to much-needed supplies of food and medicine. (DW)

Brexit Ends UK 'Landbridge' for Irish/EU Trade, Port Boss Says. The UK landbridge that offered traders the fastest route between Ireland and the European continent before Brexit will not re-emerge as a preferred option for moving goods, the head of Dublin Port was quoted as saying on Friday. (US News & World Report)

5 forces driving the new world of work. Labor markets around the world were already going through significant transformations when COVID-19 hit two years ago. As we start 2022—and enter our third year of living and working through a global pandemic—five themes are shaping the labor market and this new world of work. (HSN)

Ukraine: Microsoft reports destructive malware after cyberattack. The US tech giant has warned of the presence of dangerous malware on dozens of Ukrainian government computers, while Kyiv blamed Russia for the recent hack. (DW)

Exporting to Brazil: What You Need to Know. Currently Brazil is the eighth-largest economy in the world. So what does the recovery of this nation mean for its economy, and for exporters who may want to enter it? (Shipping Solutions)

Communicating Authentically in a Virtual World. Authenticity is important at work, but it’s challenging to identify and maintain. Plus, what if the authentic emotions you’re feeling conflict with the message you’re trying to convey to colleagues or employees? When is it useful to lean into authenticity, and when is inauthenticity actually a better strategy? (Harvard Business Review)

Poll Question


F&B Industry Vulnerable to Downside Risks in 2022


A number of downside risks are expected to pose major challenges to the global food and beverages sector this year, according to trade credit insurer, Atradius.

Sharp increases in commodity and energy prices, labor shortages, transport issues and the ongoing spread of the coronavirus pandemic could jeopardize the profitability of major industry subsectors over the coming months. In addition, consumer habits are changing as the end-client increasingly demands full transparency about their ingredients, production processes, and supply chain. All this could subsequently strain profit margins within a fiercely competitive industry, where the bargaining power of major retailers and discounters is very strong.

However, Atradius’s latest Food & Beverages Industry Trends report finds the industry, which is non-cyclical, has various drivers that can unlock potential growth this year: A growing number of middle-income consumers in emerging economies are spending more money on high than low value-added goods and the increasing use of technology to engineer solutions for global food supply are all contributing to growth. However, these factors could highly likely turn the surge in demand into a snack rather than a full meal.

The overall picture that emerges from the report provides some first insight into the overall trends in the global food and beverages industry. Variations among the countries covered in the report, ranging from Australia, Canada, Indonesia, many European countries and the U.S., are wide. Businesses should be aware of this in their regular trade activities with the industry.


Nicaragua: Ortega’s Fourth Presidential Term Starts with Fresh US, EU Sanctions

Jolyn Debuysscher, analyst, Credendo

President Daniel Ortega was sworn into office for his fourth consecutive term on 10 January. On that same day, the United States and the European Union imposed sanctions on Nicaraguan officials. The USA, Canada and the EU state that the presidential elections in November were neither free nor fair. In the run-up to the elections, most opposition figures had been disqualified or imprisoned. Moreover, election observers from the EU and the Organization of American States were not allowed to scrutinize November's poll, and journalists were barred from entering Nicaragua.

Ortega was in power between 1979 and 1990 and returned as president in 2007. He has been increasing his control on key state institutions and the economy ever since, especially after cracking down on nationwide anti-government protests in 2018. Since these protests, international pressure has been on the rise, with new sanctions regularly being imposed and limitations introduced on multilateral loans to Nicaragua, making it difficult for the country to borrow. Nevertheless, Ortega is likely to remain in control as he currently retains the support of the army. Hence, further sanctions are likely in the coming year.

Rising international pressure is hurting the country’s economic growth (forecasted at 3.5% in 2022) through depressed foreign investment. Moreover, risks are increasing in the financial sector, which could further hinder investments and hurt remittances—an important source of private consumption. Last summer, the government introduced bank legislation in order to circumvent international sanctions. For example, sanctioned officials are allowed to force banks to open accounts, while, if this happens, banks could lose their international bank relations. As a consequence of the new legislation and the increasing number of sanctions, international banks could become reluctant to maintain relations with local counterparties which in turn could lead to payment delays. Therefore, it might become difficult for Nicaraguans abroad to send remittances back home.

Under the pressure of sanctions, Nicaragua has been shifting its alliances. The Central American country established full diplomatic relations with mainland China and severed its ties with Taiwan in December 2021. The move is designed to increase investments and aid from China, but also to increase Nicaragua’s agriculture exports towards China, and to counterbalance the pressure from the West. This tactic has already proven useful as illustrated by the delivery of Chinese Covid-19 vaccines in December—a couple of days after Nicaragua severed its relation with Taiwan. In total, this delivery could vaccinate 15% of the population.

President Ortega also has been improving his relations with Russia to increase funding and investments, but also to have an ally in the UN—besides China—to avoid UN sanctions. Nevertheless, the U.S. still has a lot of bargaining power as Nicaragua’s biggest trading partner. If the U.S. would suspend Nicaragua’s inclusion in the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)—which in the short term remains unlikely—that could harm about a fifth of total current account revenues with higher tariffs. Furthermore, private transfers account for about a quarter of Nicaragua’s current account revenues, and they are mainly coming from the U.S. 

Nicaragua’s short-term political risk—representing the country’s liquidity—is in category 5/7, an elevated-risk category. The country has an adequate level of foreign exchange reserves while its short-term external debt is also manageable. However, its refinancing options on the financial markets are rather limited and expensive. Credendo’s MLT political risk is in category 6/7. The biggest downside risks are the possibility of violent unrest, imposition of sanctions that harm international bank relations, foreign-investor risk aversion that could put pressure on Nicaragua’s already elevated external debt (estimated at almost 96% of GDP at the end of 2020) and climate change-related risks (e.g., fiercer hurricanes and droughts). 

Reprinted with permission by Credendo.

Morocco: Shortened Delays but Still Widespread Late Payments


Contractual payment terms in Morocco remain long, reaching an average of 79 days, according to trade credit insurer, Coface’s payment behavior survey for 2021. Compared with 2019, however, payment terms shortened by about 14 days.

The survey shows late payments remain widespread in Morocco, with almost half of companies reporting payment delays of more than three months in the last six months. While GDP contracted in 2020, (6.3% after 2.5% growth in 2019), more companies have perceived a deterioration. In 2021, while Coface forecasts a 4.5% growth for the Moroccan economy, nearly half of companies seem to expect payment delays to remain stable, and more than a third expect them to increase.

2020 saw a 22% reduction in the number of insolvencies compared with 2019, but Coface expects a sharp increase in the number of insolvencies in 2021 due to a catch-up effect: 94% in the first half of 2021, according to Inforisk.

Inter-company credit in Morocco improved significantly over 2019:

  • Slightly less than a third of the companies surveyed believe that the legal maximum payment term of 60 days is not respected.
  • Nearly one-third of companies reported maximum payment periods of more than 180 days.
  • Compared to the last survey conducted in 2019, the estimated average delay has decreased by 14 days, from 93 to 79 days.
  • The chemical sector stands out for having much longer than average payment periods, reaching 134 days.

In line with previous surveys, payment delays are still widespread: 44.8% of the companies surveyed report significant delays of over three months. While this is a slight improvement, the number of delays of more than 6 months increased by 2.7%. However, delays appear to be shorter: The share of delays of 90-120 days has decreased by five points in favor of those indicating short delays (less than 30 days).

There is a perception of a deterioration, which is mainly the result of the major impact of the Covid-19 pandemic crisis. This was accompanied by drastic government measures that hampered economic activity (lockdowns, curfews, closure of borders to foreign tourists, closure of schools, workplaces, and travel ban).

Companies are cautious: Almost half of them expect the business climate and the economic situation to deteriorate. Only one-fifth expect an improvement in the future. About 21% of companies say they expect their turnover to fall in the next six months; 39% expect turnover to increase; and 41% expect it to remain stable.

While almost half of the companies surveyed stated that their cash flow had decreased over the last six months, only 22% of them expect it to decrease over the next six months. The surveyed companies believe that this improvement in the economic situation will result in a reduction in payment delays, due to the evolution of the pandemic, as well as the end of the state of emergency.

The survey included 380 companies and was conducted in the second quarter of 2021.

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Week in Review Editorial Team:

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