Return to Homepage
Image

Mission Grey Daily Brief - September 18, 2024

Summary of the Global Situation for Businesses and Investors

The global situation is marked by ongoing geopolitical tensions, economic shifts, and social unrest. In Lebanon and Syria, a wave of explosions killed and wounded hundreds, exacerbating tensions with Israel. Azerbaijan continues its advocacy against neo-colonialism, condemning the Netherlands' colonial control over Caribbean territories. Bangladesh faces economic challenges, with the World Bank pledging over $2 billion in support, while protests and political upheaval persist. Belgium witnessed strikes and protests against Audi's factory closure, impacting thousands of jobs. China strengthens cultural ties with New Zealand through celebrations in Christchurch. The US withdraws troops from Niger, and tensions rise between Lebanon and Israel. Australia admits to incorrectly editing footage of soldiers in Afghanistan. Ethiopia launches a Tourism Satellite Account to maximize the economic potential of its tourism sector. Austria considers purchasing new trainer jets, showcasing its air power. US-South Korea relations are strengthened through economic and security cooperation. Colombia attracts foreign investment with Everest Insurance's expansion. Romania and Croatia experience a surge in work permits granted to non-EU citizens. Brazil calls for Cuba's removal from the US terrorist list, citing economic suffering.

Lebanon-Israel Tensions Escalate

Lebanon and Syria experienced a wave of simultaneous explosions targeting handheld pagers, resulting in fatalities and mass casualties, including members of Hezbollah and a wounded Iranian ambassador. This incident, occurring amid rising tensions, has been attributed to Israel by Lebanese officials, exacerbating the volatile situation between the two countries. The Lebanese Health Ministry urged hospitals to prepare for emergency patients and advised people to stay away from pagers and wireless devices. This development underscores the fragile security situation in the region and highlights the potential risks to businesses operating in or near these areas.

Azerbaijan's Stand Against Neo-Colonialism

Azerbaijan, through the Baku Initiative Group (BIG), has condemned the Netherlands' colonial control over its Caribbean territories. Despite being supposedly autonomous, these territories are argued to be fully dependent on the Kingdom of the Netherlands, and their removal from the UN list of non-self-governing territories raises concerns about premature exclusion from decolonization efforts. Azerbaijan's advocacy against neo-colonialism aims to defend the sovereignty and independence of affected nations, particularly in the Caribbean. This stance has been reinforced by an international conference in August 2023, where the island of Bonaire announced plans to submit a draft resolution to the UN General Assembly for relisting and decolonization. Businesses should be cautious when investing in countries with colonial ties, as it may lead to instability and ethical concerns.

Economic Challenges in Bangladesh

Bangladesh faces economic challenges following Prime Minister Sheikh Hasina's resignation and protests over wage increases. The World Bank has pledged over $2 billion in soft loans and grants to support critical reforms and address the country's financial needs. The funds will be used for various key areas, including natural disaster response and economic reforms, with a focus on creating opportunities for the country's youth. The United States has also committed to providing additional aid of $202 million to support Bangladesh's inclusive economic growth. However, the country is still appealing for $5 billion in aid to stabilize its economy, which has been struggling since the Ukraine war increased fuel and food import costs. Businesses and investors should monitor the situation and assess the potential impact on their operations in Bangladesh, considering the country's ongoing political and economic uncertainties.

Belgium Protests Audi Factory Closure

Belgium witnessed protests in Brussels against Audi's decision to close its factory in Forest, impacting 3,000 jobs directly and many more indirectly through subcontractors and co-contractors. Trade unions have called for a strike day in solidarity and demanded a support plan to maintain industrial jobs. They criticized politicians for their apparent indifference and argued that austerity measures imposed by the European Union are counter-productive. The unions also emphasized the need for a strong industrial plan to protect quality jobs and investments. This situation highlights the social and economic consequences of such decisions and the importance of considering the wider impact on communities and industries. Businesses should be mindful of the potential disruption to their operations and supply chains when making strategic decisions.

Risks and Opportunities

  • Risk: The escalating tensions between Lebanon and Israel pose risks to businesses operating in the region, with potential disruptions to operations and supply chains.
  • Opportunity: Azerbaijan's advocacy against neo-colonialism presents an opportunity for businesses to support and promote ethical practices, respecting the sovereignty and independence of affected nations.
  • Risk: The economic challenges and political upheaval in Bangladesh may lead to instability and increased risks for businesses operating in the country.
  • Opportunity: The World Bank's financial support and reforms in Bangladesh could create opportunities for businesses to contribute to the country's economic growth and development.
  • Risk: The Audi factory closure in Belgium highlights the risks associated with industrial job losses and the potential for social unrest.
  • Opportunity: Belgium's call for a strong industrial plan and reindustrialization presents an opportunity for businesses to invest in innovative and dynamic sectors, creating quality jobs.

Further Reading:

A US delegation talks with Bangladesh's interim leader about the economy - Herald-Whig

A wave of exploding pagers in Lebanon and Syria kills at least 8, including members of Hezbollah - NBC Boston

ABC admits video of Australian soldiers firing from helicopter in Afghanistan was ‘incorrectly edited’ - The Guardian

Ambassadors’ Dialogue in Michigan - Korea Economic Institute

Austria flaunts air power, considers purchasing new trainer jets - Defense News

Azerbaijan’s firm stand against neo-colonialism: BIG blasts Netherlands’ agenda - AzerNews.Az

BHRRC says fashion brands ‘coy’ on business response to Bangladesh strife - just-style.com

Bangladesh says World Bank pledges over $2 billion for reforms - Deccan Herald

Belgium: Thousands protest in Brussels against Audi factory closure - ap7am

Brazilian writer Leonardo Boff calls for Cuba to be removed from the U.S. terrorist list - Radio Habana Cuba

China's cultural show celebrates moon festival, sister-city ties in New Zealand - Global Times

Croatia & Romania Are Becoming Popular Destinations for Foreign Workers Seeking Employment in EU - Schengen News

Daybreak Africa: US military completes withdrawal from Niger - VOA Africa

Ethiopia launches first Tourism Satellite Account - TV BRICS (Eng)

Everest expands global operations with Colombia office - Lifeinsurance International

Themes around the World:

Flag

Military Equipment Shortage

Ukraine faces a shortage of military equipment, including artillery and ammunition, due to limited Western supplies and Russia's advantage in resources and manpower. Ukraine seeks to produce more drones and missiles with financial backing from Western allies.

Flag

Economic Stimulus Measures

China has announced fiscal stimulus measures to address its economic slowdown, including monetary easing, government spending, and investment incentives. However, there are doubts about their effectiveness, with some analysts predicting a potential global recession if stronger action isn't taken.

Flag

International Business Relations

Israel's relations with other countries, including the US, Germany, Italy, and the UK, impact its access to weapons and military aid. While the US has been Israel's primary ally, other countries have reduced their military aid. India's Tata Group has also faced backlash for its business relationships with the Israeli government, including manufacturing weapons and providing IT services for the military.

Flag

US-India Relations

The US presidential election outcome will impact India's exports, investments, and economic growth. A Trump victory could hurt India's exports with his tariff-focused trade policies and immigration stance. Kamala Harris is likely to continue Biden's trade policies, which could be positive for India. The US-India relationship is crucial, with the US investing heavily in India's technology, infrastructure, and renewable energy sectors.

Flag

US-India Relations

The US-India relationship is crucial, with the US being a major investor in India, particularly in technology, infrastructure, renewable energy, and manufacturing. The outcome of the US presidential election will impact India's exports, investments, and economic growth. The tight race between Trump and Harris could lead to volatility, but experts believe the market will adjust. Trump's policies may challenge India's exports to the US, while Harris is expected to carry forward Biden's trade policies.

Flag

Military Technology

Ukraine's military technology and capabilities are evolving, with successful long-range strikes on Russian ammunition depots and the development of advanced drones. This has reduced Russia's artillery advantage and demonstrated Ukraine's growing self-reliance in military technology, which may impact the role of American firms in the future.

Flag

Western Weapons Limitations

Ukraine's Western weapons, such as F-16s and Abrams tanks, are limited in number and may not survive the war if used extensively. Ukraine needs to maximize their potential, but doing so entails significant risks, and Western partners must accept that these weapons may not return.

Flag

US-China Competition

Competition with China is a central issue in US politics, with economic growth, military aspects, and supply chain disruptions as key dimensions. China's lead in battery technology and production has put the US at a disadvantage, and US policy aims to boost domestic industries. China's actions towards Taiwan also threaten global economic stability.

Flag

Energy Transition and Security

The UK is transitioning to low-carbon electricity sources and renewable energy, reducing reliance on fossil fuels. This strategy aims to achieve net-zero emissions by 2050. The risk of winter blackouts is at its lowest in four years, and the UK expects to rely on record levels of imported electricity. However, there are concerns about surging energy bills due to continued gas reliance, highlighting the need for energy efficiency measures.

Flag

Political Stability and Foreign Investments

Political instability in Africa, a key region for China's Belt and Road Initiative, may force China to choose between direct intervention to protect its investments and adhering to its noninterference policy. This could impact China's development plans and its reputation globally.

Flag

Economic Growth Forecast

The International Monetary Fund (IMF) slashed Japan's 2024 growth forecast to 0.3%, the lowest since the pandemic, citing auto supply disruptions and the fading of one-off factors like tourism. However, the IMF predicts Japan's growth will accelerate to 1.1% in 2025, driven by wage and consumption increases.

Flag

Tax Policy and Talent Drain

The new Labour government's planned tax increases, including a potential rise in capital gains tax, have sparked concerns about a brain drain, with tech entrepreneurs and investors considering relocation to countries like the UAE. This could impact the UK's attractiveness for starting and scaling high-growth businesses.

Flag

US Economic Performance

The US economy is showing signs of strength, with rising equity benchmarks, strong retail sales, and lower jobless claims. The US dollar has also gained value, and improved polling for a potential Trump victory has boosted volatility in trading and the dollar's value.

Flag

Israel-Palestine Relations

Israel's treatment of Palestinians in Gaza has led to international condemnation and pressure on companies with ties to Israel. The proposed use of biometric screening and private security contractors for aid delivery in Gaza has sparked controversy. US and European officials also urge Israel to maintain financial ties with Palestinian institutions in the West Bank to prevent an 'economic catastrophe', warning of potential regional destabilization.

Flag

US Election Impact

The upcoming US presidential election between Kamala Harris and Donald Trump is impacting markets, with Trump's potential victory seen as inflationary and affecting global trade. Trump's proposed tariffs on imports may increase prices and anger US allies, while his economic proposals may add to the US deficit. Harris's plans are expected to have a lesser impact.

Flag

Climate Change and Energy Transition

Thailand is exploring ways to transition to cleaner energy sources, such as hydrogen co-firing technology, with the goal of becoming carbon neutral by 2050 and achieving net-zero emissions by 2065. The country is also implementing a taxonomy system to classify economic activities based on their environmental sustainability, with a focus on the energy, transportation, construction, and agriculture sectors, which contribute significantly to GHG emissions.

Flag

Military Spending and Economic Concerns

Israel's war against Hamas and Hezbollah has led to soaring military spending, with monthly expenses rising from $1.8 billion to $4.7 billion. This has caused economic concerns, with economists warning of declining investment, higher taxes, and a strained labor supply. The conflict has also impacted the West Bank economy and Gaza, with high unemployment and displacement.

Flag

Energy Transition

Germany's transition to green energy is attracting investments and has the potential to future-proof energy-intensive industries. However, the shift away from nuclear power and the phase-out of cheap Russian energy sources have created challenges, with energy prices remaining a factor of uncertainty.

Flag

Economic Slowdown and Mismanagement

China's economy is facing a slowdown due to falling prices, high local-government debt, declining business and consumer confidence, and a struggling property market. Beijing's stimulus efforts, including monetary easing, government spending, and investment incentives, have been criticized as insufficient and lacking detail, with analysts predicting a continued slump in the property sector and potential global recession.

Flag

US-China Port Competition

China has rapidly expanded its port infrastructure in the Global South, raising concerns about commercial, military, and intelligence-gathering uses. US ports lag behind in number and quality, with vulnerabilities exposed by Chinese-made cranes equipped with sensors and communication devices.

Flag

General Election Impact

Japan's upcoming general election on October 27 may impact the country's economic policies and market performance. There is uncertainty about the outcome, with the possibility of PM Ishiba's new government losing control of parliament. The election also contributes to the cautious stance of the Bank of Japan (BoJ) regarding further interest rate hikes in 2024.

Flag

UK's Industrial Strategy

The UK government's new industrial strategy aims to steer the country's economy through global economic uncertainty, with a focus on growth and addressing regional inequality. The strategy includes investments in infrastructure, research and development in emerging technologies, and support for key sectors like advanced manufacturing and clean energy. However, there are concerns about the lack of consideration for geopolitics and Brexit, and support for traditional industries.

Flag

US Military Aid and Pressure

The US, Israel's major ally and biggest supplier of arms, has threatened to cut military support if Israel does not improve humanitarian aid access to Gaza within 30 days. This pressure could jeopardize US military aid to Israel, though similar threats in the past have not stopped the flow of weapons. The US has also agreed to send Israel a missile defense system to deter Iranian ballistic missile attacks.

Flag

Foreign Investment Opportunities

Japan is attracting foreign investment, with a depreciated yen and government initiatives making Japanese assets more attractive. The country is also easing restrictions for foreign lawyers, creating more opportunities for international law firms, especially in cross-border deals.

Flag

Sustainable Finance Push

Thailand is implementing a classification system for economic activities based on their environmental sustainability. The system categorizes activities as green, yellow, or red, with green activities offering innovative financial products like green bonds and loans. While there is high demand for sustainable financial products, the supply falls short of the estimated annual need of 400-500 billion baht in investments for industries facilitating the transition to sustainability.

Flag

Political Uncertainty

Japan's recent parliamentary elections resulted in Prime Minister Shigeru Ishiba's ruling coalition losing its majority, creating political uncertainty. This could impact the country's market rally and business environment, which had been attracting significant investment over the past two years.

Flag

Energy Security

The UK is transitioning to low-carbon electricity sources and increasing energy imports, reducing the risk of winter blackouts. However, continued reliance on gas and zonal pricing plans pose challenges, with surging energy bills and uncertainty for clean energy investors.

Flag

Semiconductor Industry Ambitions

Japan is investing heavily in its semiconductor industry, aiming to reclaim its past dominance. The government has allocated 2 trillion yen to support domestic chip firms and international partnerships, leveraging its ties with the US, Taiwan, and South Korea, amid heightened trade tensions between the US and China.

Flag

Foreign Investment

Thailand has seen a surge in foreign investment, with companies like Amazon, Google, Microsoft, and Nvidia investing billions in data centers and electronics manufacturing. The Thailand Board of Investment (BOI) approved $2 billion in new investments in November 2024, and investment pledges increased by 42% in the first three quarters of 2024 compared to 2023.

Flag

Political Turmoil and Military Buildup

Japan's parliamentary elections and shift in leadership have caused political uncertainty, potentially impacting the country's market rally. The new government is also pursuing Japan's largest military buildup since World War II, increasing defense spending by 16% amid geopolitical rivalries with China and Russia.

Flag

Geoeconomic Fragmentation

Geoeconomic fragmentation is altering trade patterns and financial vulnerabilities in the ASEAN+3 and euro area regions. Amidst rising geopolitical tensions, countries are adopting inward-focused strategies to enhance economic and national security. This has impacted China's export activities and increased financial exposure for the euro area. Regional financing mechanisms must adapt to support member countries in navigating these complexities and fostering stability.

Flag

Aging Population

The aging populations of Japan and China present challenges and opportunities. Japan has made strides in adapting with policies and investments in healthcare, pharmaceuticals, and eldercare services. This has resulted in a robust 'silver economy', with leading companies in healthcare, eldercare, and technology. Japan's success provides opportunities for cooperation and collaboration with China.

Flag

Food Security and Climate Nexus

Environmental, economic, and political shocks have led to food insecurity for over 250 million people globally. Climate change, conflict, and supply chain issues impact food availability and access. Food security is a growing concern, with China investing in agriculture to assert leadership, especially in the Global South. US leadership is essential to strengthen partnerships and address food security challenges.

Flag

Global Manufacturing Decline

The global manufacturing industry is weakening, with declining activity in the US, Eurozone, Japan, China, and South Korea. This decline affects output, new orders, employment, and supply chains, causing businesses to pause spending and investments.

Flag

Inflation and Jobs

Inflation is a key concern for US voters, with prices remaining high despite a drop in the inflation rate. The job market is strong, but long-term issues persist, impacting specific worker groups. Wages have grown faster than inflation, helping households manage rising prices. The election outcome will influence economic policies addressing these issues.

Flag

Economic Contraction and Recession

Germany is facing its second consecutive year of economic contraction, with a projected 0.2% decline in GDP for 2024, following a similar downturn in 2023. This is due to a combination of conservative public investment, over-reliance on manufacturing and exports, external shocks like the Russia-Ukraine conflict, and high inflation. The country's export-oriented economy has not grown strongly since 2018 due to structural problems and geopolitical challenges.