BRICS invites big energy producers to join Bloc. Major emerging market nations invited top oil exporter Saudi Arabia, along with Iran, Egypt, Argentina, Ethiopia and the United Arab Emirates, to join their bloc in an ambitious push to expand global influence. (Bloomberg)

Turkey makes bigger than expected interest rate hike, targets inflation. Turkey’s central bank raised the interest rate to 25% in a surprise move that signals a continued move away from previous policy, which focused on keeping interest rates low. (Al Jazeera)

Recession fears have been blown out of the water, long-serving Fed President says. Former St. Louis Fed chief James Bullard warns the U.S. economy faces new risks of stronger growth that could require higher interest rates to keep up the fight against inflation in the months ahead. (WSJ)

How should central banks coordinate when their economies are headed in opposite directions? The global inflation crisis put the world’s central banks in lockstep for the past year, raising rates nearly in unison. But the economic landscape has changed, and diverging policies could spell trouble down the road. (CNN)

Canada’s largest bank RBC warns of softer economy, plans job cuts. RBC warned of slowing domestic growth including slowing wage growth, lower job postings and a rise in unemployment. (Al Jazeera)

Shipping rates hit a multi-year low. Trans-Atlantic shipping rates have experienced a significant decline, with various index providers presenting slightly different figures, but all confirming a substantial drop below pre-pandemic levels. (Global Trade Newsletter)

Fed officials see rates close to peak, differ on how close. Two Federal Reserve officials signaled policymakers may be close to being done with interest-rate increases, but one of them held back from ruling out further hikes until inflation is more clearly on a downward path. (Bloomberg)

Supply chains: A return to normality? While supply chains have since regained some stability, they remain largely unsettled, teetering precariously on the brink of further potential upheaval amid rampant inflation and worsening macroeconomic conditions. (Global Trade Review)

What happens in Jackson Hole doesn’t stay in Jackson Hole. Inflation has slowed significantly since last year’s Jackson Hole conference, alongside glimmers of a cooling labor market. But it’s uncertain how long that will last without more rate hikes. It’s possible the Fed’s actions so far are insufficient to keep inflation slowing. (CNN)

Panama Canal delays have shippers mulling freight diversions. Options for cargo owners include longer intermodal routes and alternative lanes like the Suez Canal, analysts say. (Supply Chain Dive)

US budget deficits are exploding like never before. Investors see a high-spending new normal keeping interest rates and inflation elevated. (Bloomberg)

How hard should the Fed squeeze to reach 2% inflation? The strategy the central bank adopts to fight the last mile of inflation has big, potentially painful implications for consumers, the markets and the economy. (WSJ)

US equity funds see the biggest weekly outflow in two months. A surge in yields triggered caution about a potential selloff in mega-cap growth stocks, while investors also reduced exposure to riskier assets ahead of Federal Reserve Chair Jerome Powell's speech at Jackson Hole. (Reuters)



Payment Delays from India Are Increasing, Survey Shows

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Jamilex Gotay, editorial associate

Customers in India paid on average 25 days beyond terms in July, up from 16.5 days beyond terms in February, according to FCIB’s Credit and Collections Survey. Nearly half (44%) of credit professionals say payment delays are increasing, with central bank issues being the most common cause of payment delays. In February, the leading cause for payment delays was supply chain and shipping issues.

Other reasons for payment delays include:

  • Cash flow issues (50%)
  • Billing disputes (38%)
  • Unwillingness to pay (38%)
  • Government approval (38%)

Indian exporters are hedging far more of their future foreign currency receipts as they cash in on the rupee's decline to near record low levels. “Last Monday, the rupee slipped below the psychological level of 83 per U.S. dollar for the first time since October 2022, when it hit a record low of 83.29,” reads an article from Reuters.

After a year of economic growth, India's annual inflation rose to its highest in 15 months with retail inflation rising sharply to 7.44% from 4.87% in June and food inflation rising to 11.51% in July. High inflation with increased prices is “beating all market expectations and putting pressure on the government to take action to bring down prices,” per Reuters. “Exporters use forward contracts to manage their exchange risks. A fall in the rupee allows them to lock in a better rate for their foreign currency receivables.”

On Aug. 10, the Reserve Bank of India (RBI) reduced the amount of cash in banking system and raised its inflation forecast for the current financial year to 5.4% from 5.1% earlier, citing pressures from food prices. “In the July-September quarter, it now sees inflation at 6.2%, significantly higher than the 5.2% earlier forecast,” reads a Reuters article.

Despite slowing payments and high inflation, India’s economy is expected to remain strong throughout the rest of 2023. India economic growth likely accelerated to 7.7% in the April-June quarter, the fastest annual pace in a year, on robust service sector growth, strong demand and increased government capital expenditure, a Reuters poll found. Indian Prime Minister Narendra Modi says the country’s economy is experiencing “robust growth and a resilient spirit. The future looks promising.” Modi’s goal is to make India the world’s third largest economy, he said during his address to the nation in August.

The S&P Global India Services PMI Business Activity Index for July signaled continued rapid expansion in output and new orders, while July's Manufacturing PMI survey showed strong expansionary conditions. “The index of industrial production, which generally shows considerable monthly volatility, recorded growth of 4.5% year-over-year in the April-June quarter, while manufacturing output rose by 4.7% year-over-year in the same quarter,” the report read. “For the 2022-23 fiscal year from April to March, industrial production was up 5.2% year-over-year, with manufacturing output rising by 4.7% year-over-year over the same period.”

The International Monetary Fund (IMF) raised its 2023 growth forecast for India by 20 basis points to 6.1%, bolstering expectations that the current G20 chair will be the world’s fastest growing major economy this year. “Now, for the inflation forecast, we have 4.9% for this year, and that's well inside the 2 to 6 target band,” said Daniel Leigh, division chief of the IMF research department. “Food prices easing is what has contributed to that, but also the strong actions by the Reserve Bank of India, which raised rates.”

What FCIB Credit and Collections Survey respondents are saying:

  • “Maintain a securities-based lines of credit (SBLOC) for the small open credit line we extend to customer. Larger shipments must be secured with a documentary or stand by letter of credit.”
  • “Know your customer. If funds are not received in advance, many issues arise with taking unfounded deductions and discounts. It has been very difficult to collect if funds are not received in advance.”
  • “Be prepared for incredible amounts of red tape for payments coming out of India banks.”

The August Credit and Collections Survey is now open. It covers Egypt, Germany, Italy and Venezuela. You will earn ICEU/Participation credit for your input. Be sure to share the link with your credit and collections network.



Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate