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This week has offered data and commentary on the state of global shipping, which is still struggling amid several disrupting forces.
New export stats look less than perfect for China, but could that be the result of a not-so-new but novel trading method it’s reintroduced for Russia? There is also some potential good news for those grappling with labelling changes in the wake of the Windsor Framework’s introduction.
The big picture: Ongoing disruption in the Red Sea is posing a threat to global trade.
A new S&P report warned that the shipping delays and cost increases caused by Houthi rebel attacks and diversions is contributing to a deteriorating trade outlook in the second half of the year.
Maersk chief Vincent Clerc added that traders trying to get ahead of disruption by placing Christmas orders early were only contributing to the problem, with key chokepoints coming under more pressure.
The Red Sea unrest isn’t the only geopolitical event disrupting pre-Christmas trade, as Reuters reports that high street clothing brands such as H&M and Zara could be affected by recent factory closures in Bangladesh. Student protests against a quota system that reserves well-paid government jobs led to the toppling of prime minister Sheikh Hasina’s 15-year rule.
Over 10% of Bangladesh’s apparel exports are to the UK, bringing US$5bn in revenue to the Asian country.
Good week/bad week: A good week for sub-Saharan African firms, as a recent report by the Berne Union credit export organisation found the export credit industry rebounded there last year, with US$23bn in medium- and long-term funding made available.
Infrastructure and renewable energy led the post-pandemic recovery. You can read our full write-up on this and other regional trade news in our member-exclusive Africa Trade Digest.
China suffered a month of slower export growth in July, with new figures showing year-on-year exports rose 7%, compared with 8.4% in June.
Commenters are mixed on how gloomy a picture this paints for the Asian superpower. Some highlight the strong import figures, with an increase in capital goods and machinery, while others point to the ongoing concerns about weak domestic demand, suggesting export-led growth would always hit a wall eventually.
How’s stat? 5%. That’s the level of GDP that the National Institute of Economic and Social Research (NIESR) estimates would be needed for infrastructure building in order to support the post-Brexit UK economy.
This is a doubling of the current 2.5% yearly spend and would also necessitate a change in current fiscal rules – which chancellor Rachel Reeves has pledged to keep in place – to remove public investment from debt calculations.
The week in customs: Eagle-eyed Politico reporters spotted that the new “not for EU” labelling requirements introduced for products moving from Great Britian to Northern Ireland as part of the Windsor Framework are now under review, according to the Gov.uk website. It’s potentially good news for food producers looking to simplify their labelling processes.
Quote of the week: “[The US is] closely watching this open book. So, the less SWIFT is used for carrying out interbank operations between Russian and Chinese banks, the calmer it is."
A payment intermediary speaking exclusively to Reuters about the novel phenomenon of barter trade becoming more commonplace among China and its allies, most notably Russia following sanctions imposed by the West following its invasion of Ukraine.
Russia is thought to be working on regulations around barter trade so more trade can be shifted off of SWIFT and out of sight.
What else we covered this week: We brought you another Trade Digest this week, covering Europe, which is soon to select a new EU trade commissioner while it inches close to finally signing a Mercosur trade deal.
There was an update on the supply chain issues stemming from the Middle East, in light of Israel’s escalation of its war in Gaza.
Our regular Trade Explained series explored rules of origin this week, as Chartered Institute expert Garima Srivastava covered the key terms and significance of understanding a good’s economic provenance.
True facts: Yesterday (8 August) marked 57 years since the founding of the Association of Southeast Asian Nations (ASEAN), a group of 10 countries that have combined their economic and political might to exact greater geopolitical influence on the world stage.