S. logistic managers are bracing for delays in the delivery of goods from China in early January as a result of cancelled sailings of container ships and rollovers of exports by ocean carriers.
Carriers have been executing an active capacity management strategy by announcing more blank sailings and suspending services to balance supply with demand. “The unrelenting decline in container freight rates from Asia, caused by a collapse in demand, is compelling ocean carriers to blank more sailings than ever before as vessel utilization hits new lows,” said Joe Monaghan, CEO of Worldwide Logistics Group.
S. manufacturing orders in China are down 40 per cent, according to the latest CNBC Supply Chain Heat Map data. As a result of the decrease in orders, Worldwide Logistics tells CNBC it is expecting Chinese factories to shut down two weeks earlier than usual for the Chinese Lunar New Year — Chinese New Year’s Eve falls on Jan. 21 next year. The seven days after the holiday are considered a national holiday.
Supply chain research firm Project44 told CNBC that after reaching record-breaking levels of trade during the pandemic lockdowns, vessel TEU (twenty-foot equivalent unit) volume from China to the U.S. has significantly pulled back since the end of summer 2022 — including a decline of 21% in total vessel container volume between August and November.
HLS analysts are predicting a further 2.5% decline in container volumes and a nearly 5-6% increase in capacity in 2023, which will continue to negatively impact freight rates in 2023.
The Bank of England looks set to raise interest rates to 3.5% or more next week, but policymakers appear increasingly split on how much tightening is needed to tame double-digit inflation as the economy heads into recession.
Financial markets currently price in a 78% chance that the BoE will raise rates by half a percentage point to 3.5% on Dec. 15, and a 22% chance of a rise to 3.75%. The market is currently expecting BoE rates to peak at 4.75% by the middle of next year, while HSBC expects the BoE to stop at 3.75% in February and Investec predicts a peak of 4%.
The central bank's immediate concern is British consumer price inflation, which hit 11.1% in October, the highest reading since 1981 and more than five times the BoE's 2% target, up from 4.2% a year earlier.
While much of the increase has been driven by higher energy prices following Russia's invasion of Ukraine, the BoE fears labour shortages and other bottlenecks caused by the COVID-19 pandemic and Brexit could make inflation slow to fall.
On Nov. 3, the BoE estimated Britain had entered a recession that would last until the end of next year and shrink output by 1.7% - a bigger drop than more recent forecasts, and one which partly reflects elevated market rate expectations at the time the forecasts were made.
Executive Director of Jamaica Vacations (JamVac), Joy Roberts, says the 2022/2023 cruise shipping season will see a major turnaround for Jamaica, following the setbacks caused by the COVID-19 pandemic.
The Wonder of the Seas, the world’s largest cruise ship, made its inaugural visit at Falmouth port on December 1. Roberts indicated that the visit by the nearly 9,000-passenger Royal Caribbean flagship vessel is just a prelude to the return of normality in the cruise sector.
“For starts, 2022 going into 2023 will see Royal Caribbean sending their huge Oasis-class vessels, such as Wonder of the Seas, Symphony of the Seas and Harmony of the Seas to Jamaica,” she noted. “These are the three biggest ships in the world and sending them here tells you about the confidence the cruise line has in our cruise shipping sector and the products we have to offer,” she added.
Overall, these are positive developments which will ultimately boost cruise arrivals and contribute towards Jamaica's total tourist arrivals returning to pre-pandemic levels in 2023.
The agriculture sector is on target to meet or surpass last year’s historic high domestic crop production figures as indicated by the Minister of Agriculture and Fisheries, Hon. Pearnel Charles Jr. He highlighted that now is a good time to invest in the country’s agriculture sector and is urging members of the Jamaican diaspora who have land in the country to put them into production.
“We have looked at the numbers, the policies and the legislative changes, and we can present to investors a clear picture that now is the best time for you to invest.”
The Government has invested in the development of agriculture, with $1 billion allocated to an incentive programme to support farmers as well as funding to create infrastructure for irrigation, conduct soil fertility mapping, and improve genetic breeding for small ruminants, among other things.
With additional private sector investments to take advantage of the legislative adjustments and government investments, the agricultural sector should be able to increase its contribution to GDP.
Fitch Solutions will closely monitor the decisions of the monetary policy committees of the Banco Central de Chile (BCC) and Banco Central de Reserva del Perú (BCRP). Both central banks are expected to refrain from hiking beyond their current rates of 11.25% and 7.25%, respectively, as headline inflation moderates and inflation expectations fall.
However, Chile is the only market in the region where core inflation has also notably eased, from 11.1% y-o-y in September to 10.8% in October, underscoring Fitch’s view that the 1,075 basis points (bps) worth of hikes the BCC has enacted since July 2021 are beginning to temper price pressures.
In addition, Fitch estimates a softening in the growth outlook for Chile with a contraction of 0.8% estimated in 2023 – reinforcing the view that the BCC will opt not to hike further, to prevent a deeper decline in activity.
For Peru, Fitch expects that the BCRP will hold rates at 7.25% at its December 7 meeting, a twenty-one-year high. Notably, after hiking by 700bps since August 2021, one-year forward Inflation expectations have continued to tick down, reaching 4.8% in October.
Consequently, as inflation expectations fall nearer to the BCRP's 1.0%-3.0% inflation target, Fitch expects the BCRP will refrain from hiking further and hold its interest rate at 7.25% through H1 2023.
Mexico's headline inflation likely continued to slow in November, a Reuters poll showed Monday, opening the door for the Bank of Mexico to opt for a less aggressive interest rate hike at its Dec. 15 monetary policy meeting. Analysts attributed the expected ease in inflation largely to the impact of pre-Christmas offers and discounts known as "Buen Fin" on some goods and services.
Nonetheless, annual core inflation, which strips out some volatile food and energy prices, was forecast to hit 8.58%, a level not seen since August 2000, which remains a key concern for Banxico.
Banxico, which has an inflation target of 3%, plus or minus one percentage point, has since its current monetary policy tightening cycle began in June 2021 increased the benchmark rate by 600 basis points to its current level of 10%.
Private sector analysts anticipate Banxico will hike its key rate by 50 basis points at the Dec. 15 meeting, slowing the pace following four consecutive 75 basis points rate increases.
In November alone, Mexican consumer prices are set to have grown by 0.70% from the previous month, while the median projection for monthly core inflation was seen at 0.52%.
Residents of China's capital were allowed into parks, supermarkets, offices and airports without a negative COVID-19 test on Tuesday, Dec. 6, the latest in a mix of easing steps nationwide after unprecedented protests against a tough zero-COVID policy.
Authorities have been loosening some of the world's toughest COVID curbs to varying degrees and softening their tone on the threat of the virus, in what many hope could herald a more pronounced shift towards normalcy three years into the pandemic.
As they waited for news, some people, wary the virus might now spread faster, rushed to buy COVID antigen kits and fever medicine and market regulators issued warnings against hoarding and hiking prices.
Both of the city's airports also no longer require people to test to enter the terminal, state media reported, although there was no indication of a change to the rule for a negative test before boarding a flight.
The loosening of the rules comes after a string of protests last month that marked the biggest show of public discontent in mainland China since President Xi Jinping took power in 2012.
China may announce 10 new easing measures as early as Wednesday, Dec. 6, two sources with knowledge of the matter told Reuters. The prospect of relaxation has sparked optimism among investors that the world's second-biggest economy would regather strength and help to boost global growth.
British grocery inflation edged lower in November, the first decline in nearly two years, but remained near record highs, providing little relief for consumers ahead of the key Christmas trading period, industry data showed on Tuesday, Dec. 6.
Market researcher Kantar said grocery inflation in the four weeks to Nov. 27 was 14.6%, down 0.1 percentage points from October's record high, marking the first fall in 21 months.
"Grocery inflation still has a long way to come down though, and based on the current rate, shoppers will have to spend an extra 60 pounds ($73) in December to buy the same items as last year," Fraser McKevitt, Kantar's head of retail and consumer insight said.
Prices are rising fastest in markets such as milk, dog food and butter, said Kantar. It highlighted more evidence of the coping strategies shoppers are adopting to mitigate rising costs, with own-label sales now up 11.7% year-on-year and sales of the cheapest value own-label lines up 46.3%.
The country’s farmers are urged to increase food production to supply demand in the hospitality sector, which is expected to double over the next five years. Minister of Tourism, Hon. Edmund Bartlett, in making the call, noted that with the number of hotel rooms expected to reach 40,000 in five years, it is also anticipated that the need for production will expand.
He noted that the current demand for agricultural produce in the sector is about $67 billion. As such, he said that opportunity exists for farmers to invest in increasing earnings, provide employment, save foreign exchange spent on imports, and ensure that tourists can eat fresh Jamaican food.
Currently, the supply to hotels of fresh fruits, such as strawberries, provides a lucrative opportunity.
The Ministry also provides means to connect farmers and buyers through the Agri-Linkages Exchange (ALEX) project. Already, this year, this project was used to supply more than $125 million worth of produce between January and October.
Overall, the push towards increasing agricultural output bodes well for domestic consumption which is a positive for GDP growth.
A revised Income Tax Relief (Large Scale Project and Pioneer Industries) Act, 2014, that incentivises investments of US$1 billion or more, is expected to be tabled in Parliament by the end of the fiscal year 2022/23, next March.
This was disclosed by the Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, while speaking during the Invest Jamaica 2022 Business Conference at the Montego Bay Convention Centre in Rose Hall, St James, on Tuesday (November 29).
He said the new regime is designed to create a transparent and automatic fiscal incentive framework, which will appeal to local or foreign investors.
“That amended Act will have some provisions in it that allow us to offer investors who are making that kind of commitment to Jamaica, with a minimum level of jobs created, certain benefits,” he told investors.
