Economic Digest – November 2018
Check out this months economic news:
Global seaborne trade rose by 4% in volume terms in 2017, the fastest growth rate in five years. Expansion was largely driven by increased industrial production in emerging markets, which account for 60% of shipped exports. Rising trade was accompanied by a 3.3% increase in maritime fleet capacity. Autonomous ships could boost efficiency in the industry, though job losses and cyber-security concerns may slow the adoption of the technology. Despite the tension between the US and China, seaborne trade is forecast to rise by another 4% this year and then 3.3% annually until 2023.
The European Parliament has approved a suite of restrictions on the use of antibiotics on healthy farm animals in a bid to stop the halt of “superbugs” resistant to medical treatment. Europe’s animals consume more antibiotics than humans on average, often via livestock feeds on factory farms, where farmers routinely use them as a prophylactic against the occurrence or spread of disease. 25,000 people die each year across Europe from antimicrobial-resistant infections and scientists have warned that without reform, routine medical interventions could soon become impossible.
Canadian farmers and fishermen are sending big new shipments of wool, lobster and canola oil to China, driving a rush of new exports to the world’s second-largest economy amid the disruption to the flow of global goods caused by the US trade war with Beijing. From April to August of 2018, according to Statistics Canada data, the value of Canadian merchandise exports to China rose 23%, a surge of nearly C$2-billion over a period of greatest tariff escalation between the US and China. In some cases, China has become a direct replacement for sales that once went to the Americans.
Experts are warning that some Asian countries will grow old before they get rich, unlike the West. One consultancy warns that by 2030 the region will account for three-fifths of the worlds over 65s as the elderly are living longer with better access to health care. Spending on the older generation will amount to US$20-trillion in the next 15 years. In countries like India nine out of ten work in the informal sector, excluding them from pension schemes.
In 2016 Chinese investment in the European Union jumped to nearly US$40-billion, nearly double from the previous year. Much of this is state-backed and speaks of the Communist Party’s ambitions to keep Europe from helping America to contain China’s rise. This huge influx of money is prompting leaders in Berlin, Brussels and elsewhere to worry about the power and influence China is gaining in the process, especially in the EUI’s smaller countries. They have since tightened the screening of Chinese investment and are trying to create a more united European inward investment policy.
For much of the past three decades, private firms in China have flourished. Starting from almost nothing, they account today for about 80% of industrial output, 90% of exports and nearly all new jobs. State Owned Enterprises (SOEs) still dominate sectors that are deemed strategic, notably finance and energy, but they lag behind private firms in performance with much lower returns on investment. Some Chinese economists have called SOEs dead-weights that gobble up resources.
The use of drones to make household deliveries has not taken off as quickly as expected, but with operators gaining experience, regulators have begun to relax the rules, especially away from built-up areas. People living in parts of Reykjavik can get restaurant food delivered to their backyards and a drone in Singapore will soon ferry supplies to ships moored offshore.
Railways have played an integral part in the development of modern America. The first coast-to-coast line finished in 1869, allowed the West to be settled. But after the Second World War people abandoned trains for cars. After several rail lines went bust, in 1971 Congress nationalised the remnants as Amtrak to stop passenger services from ending completely. But Amtrak has not revived rail’s fortunes. Brightline, a start-up from Florida thinks it can. Its Miami terminus looks like the lobby of an expensive hotel and earlier this year, it opened its debut line, costing US$3-billion, between Miami and West Palm Beach in Florida, the first new privately-funded passenger line in over a century. It has now announced plans to expand with a new line between Los Angeles and Las Vegas.
The world’s longest sea crossing bridge has opened nine years after construction first began. Including its access roads, the bridge spans 34 miles and connects Hong Kong to Macau and the Chinese mainland city of Zhuhai. The bridge cost about US$20-billion and should have opened in 2016. Construction has been dogged by safety issues and at least 18 workers have died on the project. . The bridge is designed to withstand earthquakes and typhoons and was built using 400,000 tonnes of steel, enough to build 60 Eiffel Towers. Special cameras will be on the lookout for drivers on the bridge who show signs of getting sleepy–yawn three times and the authorities will be alerted.
Yields of honey in the UK have hit a four year high as the recent record-breaking summer increased bees productivity by a third. Hobbyist beekeepers in Britain produced an average of 30.8lb of honey this summer, compared with 23.8lb in 2017. The yield is the highest since 2014 but is still considered small compared to averages a few decades ago. Wales had the greatest improvements in honey yields, which nearly doubled from last year’s average. It is said that 50 years ago, beekeepers could expect close to 100lb of honey per hive.
Ukrainian scientists have invented an eco-friendly plastic bag that decomposes quickly, does not pollute the environment and what’s more you can eat it once it’s worn out. The material was discovered as a by-product of combining natural proteins and starches. They have also moulded cups, drinking straws and bags from a starch derived from red algae which would otherwise be made from disposable plastic which can take hundreds of years to decompose. The cup decomposes in 21 days and the bag disintegrates in the earth is just over a week.
A tiny companion phone has been released in Japan. It is 4G and 5.3mm thick with an electronic-paper touch screen, similar to e-books. The compact device is designed to fit inside a card holder and is part of a trend to offer so-called companion mobile devices to those who already own larger smart phones. It has a limited functionality, with calls, texts and a net connection but no camera or facility to work with mobile apps. The flurry of so-called companion reflects the desire of phone makers to try and find new sales opportunities in a saturated market.
The recent transit of four liquefied natural gas (LNG) ships through the Panama Canal in a single day marks a new milestone for the canal and reinforces its capacity to handle growing demand from the US, where several new LNG export terminals are scheduled to begin operating.
The US has announced plans to withdraw from a 144-year-old postal treaty, which the White House says lets China ship goods at unfairly low prices. The United Nations treaty sets lower international rates for packages from certain countries, a move originally designed to support poorer nations. The US says the discounts put American businesses at a disadvantage. The rise of international online shopping has increased small packages being sent by the postal system and it can now cost more to post an item within the US than it does to send a similar item from Shanghai to the US.
Scientist say that more than one thousand varieties of rice have been safeguarded for the future. Samples in the world’s largest rice gene bank in the Philippines are being used to help farmers develop rice crops that can survive pests, drought and flooding. It is part of international efforts to store seeds in gene banks to protect food supplies in a warming world. Rice is relatively easy to store and should survive preservation for hundreds of years at low temperatures. Over 90% of the world’s rice is produced and consumed in Asia and it is estimated that by 2050 consumption will rise from 420 to 525-million tonnes.
The underground economy is defined as consisting of market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature. In 2016, the Canadian underground economy totalled C$51.6-billion or 2.5% of gross domestic product (GDP). A figure that has been relatively stable, reaching a high of 2.7% in 1994 and a low of 2.2% in 2000.
Elephants are poached for their ivory, rhinos for their horns and tigers for their skins, but not just the famous fauna species from manta rays, to musk deer are sold as medicine, food, pets or ornaments. The pangolin is the world’s most trafficked mammal with some 100,000 snatched from the wild each year for their meat and scales. The amount of organised crime the trade generates is the fourth-largest trans-national crime after drugs, weapons and human trafficking, and is worth US$17-billion annually,
As water shortages become more common around the world, the laundry industry is under pressure to reduce consumption of this precious resource and generally minimise its environmental impact. A new technology, polymer beads to replace water, apparently is able to reduce the amount of water laundry uses by up to 80%. A British tech firm has started selling these specially designed washing machines, which after you put in your laundry, the drum adds about 23,000 small polymer spheres with a total weight of around 6kg plus a cup of water and detergent. Nylon polymers attract most stains and can replace most water in a laundry cycle.
FRUIT AND VEG
A new Canadian-led research study claims that the world’s agricultural producers are not growing enough fruits and vegetables to feed the global population a healthy diet. The recent study indicates that agricultural practices are not keeping step with prevailing dietary wisdom, greatly overproducing grains, sugars and fats while growing three times less produce than what nutritionists suggest everyone should consume. The study also stresses that a focus on growing more fruits and vegetables should go hand in hand with reduced reliance on livestock production in order to limit the agriculture sector’s overall impact on the environment.
In Loudoun County, Virginia, 30 miles outside Washington, DC, 10 of the 12 breweries in business in 2016 opened their doors since 2012 all of them described as craft breweries. Almost 400 US counties did not have a single brewery in 2012 but, by 2016, each had at least one. Every one of the states and just over a quarter of the nation’s 3,143 counties now have at least one brewery
The US Department of Justice has announced charges against three US companies for felony price fixing as part of a broad collusion investigation of the canned tuna industry. Prosecutors allege that the industry’s top three companies conspired between 2010 and 2013 to keep prices artificially high. One major company faces up to a US$100-million fine when it is sentenced and the three companies face a myriad lawsuits from wholesalers, food service companies and retailers.
An attempt by Coca Cola to combine English and New Zealand’s indigenous Maori on vending machines has backfired. The company has inadvertently written “Hello Death” on a vending machine full of Coca Cola.