Vietnam and Myanmar should diversify beyond Chinese trade, suggests Commerzbank’s Agnes Vargas in Trade and Forfaiting Review

In a relatively short space of time, Vietnam has emerged from a history of conflict, partition and poverty to become an industrialised, exporting powerhouse. The economy grew by 6.2% last year, and is likely to expand by a further 6.7% in 2017. Following closely in Vietnam’s footsteps is Myanmar. One year on from the election of its first democratic government, the country is leaving behind decades of political isolation and military dictatorship. Engaging in trade with the outside world is expected to help generate GDP growth of above the 7% mark over the next few years.

But with both nations’ trade largely flowing to China – where growth is flattening – a change of course may be required. In an article for Trade & Forfaiting Review, Agnes Vargas, Regional Head of Greater China & ASEAN at Commerzbank, argues that, by diversifying exporting options beyond their tried-and-tested market, Vietnam and Myanmar may better sustain and build on their new-found prosperity.

Read the article, “Trading Friends” here.

Beyond copper: Commerzbank’s Robert von Oldershausen outlines the next steps for the Chilean economy in International Trade Magazine

2016 marked the latest year in a long period of unusual stagnation for the otherwise resilient Chilean economy. In a feature for International Trade Magazine, Robert von Oldershausen, Senior Relationship Manager for FI Latin America at Commerzbank, explains what has held back growth, and suggests the steps the country might take to economic resurgence.

In the article, ‘Chile’s Road to Recovery’ von Oldershausen shows that Chile was traditionally one of Latin America’s strongest and fastest-growing economies, often boasting annual GDP growth rates of around 5%. In recent years, it has performed considerably below par, posting growth of only 1.9% in 2014, 2.3% in 2015, and an expected 1.8% last year. Other developed economies may be satisfied with such figures; for Chile, they are not up to scratch.

Weak global demand and low prices for the country’s copper have been the key culprits. The metal contributes half of Chile’s total exports, underpinning government revenues and foreign exchange supplies). Von Oldershausen argues that Chile would do well to continue the diversification of its economy – moving away from the extractive sector, developing a wider range of industries, and fostering deeper trade relations with its Latin American neighbours – in order to ensure future prosperity.

Read the article here (with a subscription).

Deutsche Bank’s Anil Walia on the crucial role of supply chain finance in Procurement Leaders

deutsche-bank-logoIn Procurement Leaders’ November/December 2016 issue, Anil Walia, EMEA Head Supply Chain Finance at Deutsche Bank, explains the crucial role supply chain finance can play in the buyer/supplier ecosystem, contributing to the benefit of all involved.

Under the title “Ramping up the synergies in cash-poor times” Walia relates how many of the discussions in which he recently engaged with Chief Purchasing Officers of global companies sounded a note of concern at volatility and complexity in purchasing leading to disruption.

Complexity of technological innovation is also making supply chain finance (SCF) tools increasingly sophisticated, says Walia. However, the fundamental concept underlying SCF is beautifully simple: “Purchasers and suppliers operate in symbiosis, yet often one partner has better payment terms or cheaper financing than the other. By tapping into SCF, these benefits can be shared rather than halved – reducing operational and financial risks for both.”

He sums up: “By extending better financing options in both directions, instead of pitting buyers and sellers against each other, SCF strengthens ecosystems of buyers and suppliers link-by-link.”

You can read Walia’s column in full here (please note that this lies behind a paywall).

Natixis’ Patrick Artus discusses whether European institutions can rescue the Italian economy in FTSE Global Markets  

 

patrickartusFollowing the Italian electorate’s resounding rejection of a constitutional reform package in December 2016’s referendum, further uncertainty beckons for the country’s fragile economy. This begs the question: can Italy’s sluggish growth be lifted by European financial institutions, including the European Central Bank?

In an article for FTSE Global Markets, Natixis’ chief economist, Patrick Artus discusses how the nature of Italy’s troubles, characterised by declining competitiveness and productivity, renders any assistance from European institutions largely redundant.

With this in mind, Artus argues the perpetual focus on the country’s banking crisis is detracting attention from addressing the country’s poorly-performing labour market – an economic challenge that can only be resolved from within. As such, Artus believes that, “As long as this neglect continues, Italy could remain the sick man of Europe.”

To read the full article, please click here.

ICC UK’s Chris Southworth discussing latest GDP figures and Brexit on Sky News

Earlier today, Chris Southworth, Secretary General of the International Chamber of Commerce (ICC) UK was interviewed on Sky News following the release of the latest UK GDP figures from the Office for National Statistics. The figures reveal that GDP grew by 0.5% in the three months to the end of September, down from the growth rate of 0.7% recorded in the second quarter – but better than predictions.sky3

Chris explained that there is still much uncertainty for UK business and the upcoming Brexit negotiations after Article 50 is triggered. He highlighted the fact that the UK is both an import and export economy, and that the Government needs to be pragmatic and mindful of the potential impact on trade in the coming months.

Specialist press cover Commonwealth Enterprise and Investment Council and Ship Owners Association of Nigeria’s joint Maritime event

The Commonwealth Enterprise and Investment Council (CWEIC) and the Ship Owners Association of Nigeria’s (SOAN) joint event “The Future of the Maritime Industry in Nigeria” at Marlborough House on 28th September was featured in All About Shipping, Hellenic Shipping News, Oil, Gas and Shipping Magazine, Marine Link, This Day and Marine Network.

Investors, business leaders and government officials – representing maritime interests from across the Commonwealth – united in a bid to stimulate discussion, increase cooperation and forge partnerships around the myriad opportunities of Nigeria’s maritime sector. Hosted as part of CWEIC’s Commonwealth Maritime Initiative (CMI), which aims to promote the maritime industry as a key driver of economic growth and trade (cargo carried by sea is set to quadruple by 2050), and to connect maritime business interests with state-level representatives and organisations from across the Commonwealth.

Focusing initially on Nigeria   ̶   before expanding across the Commonwealth  ̶   the CMI aims to maximise commercial opportunities in an industry often suffering from chronic underinvestment. Nigeria, Africa’s largest economy with a huge maritime ecosystem, is its initial focus   ̶   offering substantial investment and development opportunities across shipping, mining, manufacturing and service industries.

commonwealth-maritime-initiative-nigeriaNigeria’s maritime industry was hailed as a driver of economic growth and alternative revenues for a country trying to diversify away from reliance on oil. Nigeria’s government recently announced economic reforms aimed at transforming Nigeria into one of the most attractive investment destinations in the world by 2019, with maritime set to play a key role in Nigeria’s economic future.

Greg Ogbeifun, Chairman of SOAN and Co-Chair of the CMI said: “The roundtable gave CMI members the chance to network and explore Nigerian maritime investment opportunities, learn about industry best practices and challenges, and be at the forefront of radical and exciting change in the Nigerian economy. The UK is the world leader in maritime services, and by hosting this event in London we ensured conditions were ideal for an insightful, productive and profitable meeting of minds.”

Following this successful event, CWEIC will expand the CMI across the Commonwealth, highlighting further investment opportunities across the many developing, coastal economies within the 53 nation collective.

 

Commerzbank’s new report on Sub-Saharan Africa makes its mark on the specialist press

CaptureCommerzbank has released a major new study on trade and economic prospects in Sub-Saharan Africa. The report, ‘Tackling the Headwinds after the Economic Turnaround’, shows that after a promising decade – marked by strong economic growth of around 5% per year, underpinned by booming trade in raw materials and inflows of foreign capital to infrastructure projects – the region’s fortunes have taken a turn for the worse. Since mid-2014, prices for commodities, from oil and copper to gold and coffee, have plunged by 40-60%. This has set off a chain reaction of reduced trade revenues, withdrawal of investment, and rising debt.

Yet Commerzbank’s experts explain that all is not lost. Setting out targeted growth agendas for employment, trade, agriculture and finance, the report notes that great potential remains. It is clear that economic diversification is essential – having enabled Tanzania to grow by 7% annually over the last five years.  Additionally, infrastructure investment, coupled with political stability and reforms, can spur development – as Ivory Coast’s impressive 8-10% growth since 2012 highlights. The experts also argue that, if key regional players such as Nigeria can wean themselves off dependence on oil revenues and make adequate fiscal adjustments, such countries can take advantage of large populations to build new industries for the future.

Commerzbank’s study includes insights from the African Development Bank, the Organisation of Economic Cooperation and Development (OECD), and trading companies working ‘on the ground’. This release marks the third edition, since 2012, of a successful series of reports on Sub-Saharan Africa’s trading landscape.

News of the report was covered across the finance and trade press, including World Finance, Yahoo Finance, Mondo Visione, FTSE Global Markets, Global Banking & Finance Review, and Global Trade Magazine.

In Global Trade Review, Commerzbank’s Robert von Oldershausen discusses the key developments in the Chilean economy and what it means for its banking landscape

84ad475d8f79e6de5696266b4d113d33In the latest edition of specialist commerce magazine, Global Trade Review, Commerzbank’s Robert von Oldershausen, senior relationship manager for FI Latin America, offers his insights on the Chilean economy. The article, ‘Chile’s Balancing Act‘, notes that the export-dependent country is struggling in the face of low commodity prices and weak demand in global markets – particularly for its top resource, copper.

The article explains that the Chilean economy, however, does remain stable, and is set to grow by around 1.5% this year. And as von Oldershausen suggests, “This is not that bad in European terms”. But he points out that “in Chilean terms, 1.5% growth is low.”

According to von Oldershausen, Chile’s economic growth relies on continuing the diversification of its export base. In order to support this, banks will be key when facilitating investment in new industries. Encouragingly, Chile’s banking sector is healthy, with ample liquidity based on provisions made in the past year. Von Oldershausen comments: “In 2016, most banks in Chile have made good profits despite the economic slowdown. This a welcome sign for Commerzbank and our correspondent banks in Chile that support corporate clients”.

Read the article online here (note: a subscription is required).

Patrick Artus writes for FTSE Global Markets on the ECB’s efforts to reactivate the sluggish eurozone economy

patrickartusSince 2014, the eurozone has received two opportunities for economic growth: the quantitative easing (QE) programme and plummeting oil prices. But, has the European Central Bank (ECB) capitalised upon these gifts to advance the eurozone economy? Patrick Artus, Natixis’ chief economist, believes the ECB’s success has been partial.

Writing for FTSE Markets, Artus explains that – when such stimuli subside – the eurozone’s structural reform has been too ineffectual in order to achieve economic resilience. For instance, continually poor productivity gains and high debt burdens threaten to exacerbate once oil prices normalise or the ECB abandons its QE programme.

That said, Artus believes the eurozone labour market’s long-term restructuring – an opportunity afforded to eurozone governments due to the ECB’s support – has bolstered total eurozone employment. Whether this consolation is enough to resuscitate the eurozone, however, is yet to be seen.

To read the full article, please click here.

 

 

Commerzbank’s experts discuss the trade potential of Brazil and India in the specialist press

brazil-india-1280x680(1)In an exclusive interview for BRICS Business Magazine, Thomas Krieger and Alexander Rost – Commerzbank’s respective regional FI heads of Latin America and the Indian subcontinent – offer their insights on the trading potential of Brazil and India. 15 years after Goldman Sachs identified the so-called ‘BRICS’ group of major emerging global powers, the economic fortunes of these two countries could scarcely be more different: while Brazil suffers its worst recession in a century, India is making its mark as one of the fastest-growing economies in the world.

For Krieger and Rost, however, the two countries are united in their need to develop their trade. According to Rost, “While each country tends to rely on exports of low-value goods, long-term economic security relies on developing a broader industrial base capable of sustaining higher-value products.”

Krieger agrees: “Given the BRICS group is not particularly well-suited to trading amongst its own members – mainly due to too many similarities when it comes to the supply and demand of goods – both Brazil and India would do well to look closer to home, to their neighbouring countries and explore these new markets for their exports.”

Read the article on pages 44-46 of the magazine online here (note: the magazine requires a subscription).