Charting The Global Economy: Maritime Attacks Drive Up Costs

Shipping costs are rising as hundreds of container ships that typically transit the key maritime artery of the Red Sea and Suez Canal are rerouting after a multitude of attacks by Iran-backed Houthi militants.

Merchant shipping

Combined with disruptions at a drought-stricken Panama Canal in the Western Hemisphere, the rise in merchant shipping rates poses headwinds for central bankers in their inflation fight.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World

Half of the container-ship fleet that regularly transits the Red Sea and Suez Canal is avoiding the route now because of the threat of attacks, according to new industry data. The tally compiled by Flexport Inc. shows 299 vessels with a combined capacity to carry 4.3 million containers have either changed course or plan to. That’s about double the number from a week ago and equates to about 18% of global capacity.

The theme for the African continent in 2024 appears to be all about who’s in charge. From South Africa to Algeria, a third of the continent’s nations will choose new governments, including coup-hit Mali, Chad and Burkina Faso — if their junta leaders keep their word.

Asia

Vietnam’s economy fared better than expected in 2023, indicating it will keep improving as consumer demand returns, exports recover and investments surge. GDP rose 5.05% from a year earlier after increasing an initial 8.02% in the previous year. The economy is expected to return to 6% growth next year, and vie for the best-in-Asia growth tag by 2025, a Bloomberg survey shows.

Investors who bought into the idea two years ago that China’s consumer and green energy stocks stand to win big from President Xi Jinping’s renewed economic agenda would have seen their holdings pummeled in 2023.

Europe

Spanish inflation remained steady at the end of 2023, tempering a likely euro-zone pickup that may embolden policymakers to keep pushing against bets on imminent interest-rate cuts. Even though inflation may remain elevated in the near term, central banks in Spain, France and Italy all project it will slow to 2% or even lower in 2025. Germany’s Bundesbank isn’t so optimistic, seeing Europe’s largest economy stuck above the target into 2026, kept higher by wages.

Russia’s oil-product exports dropped on a weekly basis, led by a slump in shipments of diesel, naphtha and fuel oil. However, the four-week average climbed to the highest in more than seven months amid a ramp-up in oil processing at Russian refineries.

US

Initial applications for US unemployment benefits increased in the week leading up to Christmas, while remaining at a level that is consistent with a resilient labor market.

Economy

Employers expect to hire less in 2024, according to several regional Federal Reserve bank surveys, a trend that’s set to limit wage gains and cool inflation pressures. At the same time, the results don’t indicate an outright contraction in payrolls.

Emerging Markets

Kenyan consumer prices rose at the slowest pace in almost two years in December, while economic growth accelerated more than expected in the third quarter, delivering some respite for the battered East African economy.

Brazil’s annual inflation slowed less than expected in mid-December, highlighting the difficulties facing central bankers as they cut interest rates while attempting to haul prices to the tolerance range by year’s end.

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Source : Ajot

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