Iraq: The Slippery Road to Economic Recovery

Iraq: The Slippery Road to Economic Recovery

Although the COVID-19 pandemic’s impact on maritime trade last year was less severe than expected, the knock-on effects will be far reaching and could transform the sector, the UN trade and development body, UNCTAD, said in its latest report, published on Thursday.

Maritime trade contracted by 3.8 per cent in 2020, but later rebounded, and is estimated to increase by 4.3 per cent this year, according to the report.

UNCTAD’s Review of Maritime Transport 2021 reveals the outlook for the medium term remains positive but subject to “mounting risks and uncertainties”, such as unprecedented pressures on global supply chains, dramatic spikes in freight rates, and price increases affecting both consumers and importers.

Vaccine roll-out critical

The agency said global socioeconomic recovery will depend on smart, resilient and sustainable maritime transport, and a worldwide COVID-19 vaccination effort that sees developing countries having fairer access to doses.

“A lasting recovery will depend on the path of the pandemic and largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out,” said Rebeca Grynspan, the UNCTAD Secretary-General .

“The impacts of the COVID-19 crisis will hit small island developing States (SIDS) and least developed countries (LDCs) the hardest,” she added.

As UN chief António Guterres has repeatedly pointed out, COVID-19 has laid bare numerous social inequalities.

Existing challenges exposed

UNCTAD said the pandemic has also exposed and magnified existing challenges in the maritime transport industry, particularly labour shortages and infrastructure needs.

The agency has called for urgent action to resolve the plight of hundreds of thousands of seafarers who remain stranded at sea due to the pandemic, as lockdowns, border closures and a lack of international flights have affected crew replacements and repatriations.

The report said industry, Governments and international organizations must ensure seafarers are designated as key workers and vaccinated as a matter of priority.

The report examines factors that are driving consumer prices higher.

Logistical challenges, soaring rates

The rebound in maritime trade has been marked by “pandemic-induced logistical challenges”, such as shortages of equipment and containers, less reliable services, and congested ports. The resulting supply chain bottlenecks have hindered economic recovery.

Challenges also exist on the supply side. Although orders for new container ships dropped by 16 per cent last year, continuing a previous downward trend, shipping companies have increased orders for new vessels this year amid the current capacity limitations.

Shipping lines have benefitted from soaring freight rates, the report said.

Surcharges, fees and rates temporarily rose even higher following the grounding of the Ever Given, the huge container ship that blocked the Suez Canal this past March, disrupting global trade.

UNCTAD warned that import and consumer prices will “significantly increase” if the surge in container freight rates continues.

Monitor market behaviour

Its analysis showed that global import price levels will increase on average by 11 per cent, and up to 24 per cent for SIDS, which primarily depend on maritime transport for imports.

If the situation continues, consumer prices could be 1.5 per cent higher in 2023. The rise is expected to be 7.5 per cent in SIDS, and 2.2 per cent in LDCs.

UNCTAD highlighted the need to monitor market behaviour and ensure transparency when it comes to setting rates, fees and surcharges.

The report also examines how the pandemic has accelerated “megatrends” that could transform maritime transport, such as digitalization and automation, which should lead to efficiency and cost savings.

Build climate resilience

The shipping industry is also coming to grips with climate adaptation and resilience, though the urgent need to decarbonize and find alternative fuels to reduce emissions will come at a cost.

“By exposing the vulnerabilities of existing supply chains, the COVID-19 disruption has sharpened the need to build resilience and revived the debate over globalization and the supply chains of the future,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics.

One gobsmacking chart shows how Biden’s economy is doing way, way better than all the others

Despite flagging views of the economy, America’s recovery is stronger than others — by a lot.

The US is the only member of the G7 group of rich nations to have a larger economy now than before the pandemic.

America passed much more stimulus during the crisis than other advanced economies, making the recovery bigger.

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Americans aren’t too happy about the country’s economic recovery. They should see the other guys.

For the most part, the US is rebounding well. Hiring picked up in October after slowing during the Delta wave, and consumer spending leaped to record highs last month.

Yet the average American thinks the economy is in the can. Consumer sentiment plunged to decade lows in November, with some even saying the current situation is worse than the depths of the Great Recession. Inflation is likely to blame. Prices rose in October at the fastest pace since 1990. While the country is healing, people aren’t liking the higher prices that have come with it.

Compared to other advanced economies, however, the US is in a league of its own. Preliminary gross-domestic-product readings for the third quarter show the US as the only G7 nation to surpass its pre-pandemic health, the Organisation for Economic Co-operation and Development said in a Thursday report.

The US’s recovery has been so strong, it’s played a significant role in lifting the world economy. Healthy third-quarter growth in the US, Korea, Israel, and some European countries led GDP in the 37-country OECD group to surpass its late 2019 levels by the end of September, according to the report. Just look at how far ahead the US is in GDP growth.

Still, the US rebound isn’t the boom it was just months ago. The national economy grew just 0.5% in the third quarter, down from the previous one-quarter increase of 1.6%. That was among the weaker gains of the OECD group and less than half the growth seen in peers including Italy, France, and Germany.

What $5 trillion looks like in the race to recovery

The discrepancy between the US and other nations' recoveries comes down to money. While most advanced economies passed some form of stimulus to aid their economies earlier in the pandemic, US lawmakers flooded the country with unprecedented federal aid.

More than $5 trillion in fiscal support has been approved since the start of the pandemic between President Donald Trump and President Joe Biden, and hiring and spending have boomed as Biden oversaw a mass vaccination program.

Aid was doled out through direct payments, enhanced unemployment benefits, and forgivable loans for small businesses, among other items. Together, the stimulus packages helped drive record spending and left Americans with trillions of dollars in boosted household savings.

Japan’s fiscal response — which is widely estimated to be the third-largest — comes in at roughly $3 trillion.

To be sure, measuring aid in dollars alone misses key details. For one, many advanced economies had larger social safety nets than the US before the pandemic, meaning they had less to spend on aid once lockdowns began.

And while the US’s response is the largest by sheer price tag, it’s much closer to other countries when measured as a share of GDP. Singapore’s fiscal response is estimated to come in at 27.1% of its annual GDP, roughly the same as the US’s stimulus. Slovenia and Guyana follow close behind.

Regardless of the measure, the US enjoys a healthy lead in the global recovery. Americans may be annoyed with higher inflation, but the alternative might’ve been weak stimulus and a much slower rebound.

UM think tank projects slow, steady economic recovery into 2023

A respected University of Michigan report says the state’s economy is improving at a slow and steady pace, with a full recovery expected in 2023.

The University of Michigan Research Seminar in Quantitative Economics (RSQE) study says employment and personal income growth remain steady.

RSQE Director Gabriel Ehrlich says federal COVID-19 assistance allowed people to continue spending during peak periods of unemployment.

“Incomes have been up during the pandemic because of all the government support,” he told Michigan Public Radio. “And I know that doesn’t cover everyone. Some people have slipped through the cracks and some people have lost income, but the government really has fired the bazooka in terms of support through the pandemic.”

He also says expanding vaccines to younger children could make teachers and parents more confident about re-opening schools and returning to work. But Ehrlich adds possible drags on the economy include inflation and rising COVID numbers.

“We do know, obviously, that boosters are becoming more available. We know that kids now as young as five can be vaccinated. So, you know, really, vaccination remains one of the most important keys to getting a full recovery,” he said. “ “So, I do think the labor situation should improve as COVID improves.”