geoeconomy

It is hard to imagine anything more central to the world's choke points than the Suez Canal. Albeit relatively recent, built only in 1869, its enviable position - where the Asian, European, and African continents meet - has meant it has quickly climbed the ranks of the hottest bottlenecks. Around 12% of global trade passes through the Suez Canal, accounting for 30% of all global container traffic, and over $1 trillion worth of cargoes annually. In 2020, some 19,000 ships used the route.

It looked like 2020 was going to be a catastrophic year for global trade flows. Actually, despite the heavy impact of Covid-19, the international trade system showed a remarkable degree of resilience. Trade flows shrank by 5% globally, a much better (or less worse) performance than it had been initially expected in view of the substantial paralysis of several global value chains during the first pandemic wave. Nonetheless, Foreign Direct Investments (FDIs) experienced a much more dramatic drop, falling by 40%.

The ocean transport market has been confronted with a worldwide prolonged disruption since August 2020. Consequently, date shippers have been trying to bring order to their procurement and carrier management processes , yet failing to do so, in part because maritime problematics concern both ports and hinterland connections.

The major geopolitical theme of the next decade will be the US-China competition. Donald Trump was able to build a campaign around China because of Beijing’s rise and China's changing view of the US, which shifted from a “model” position to a “declining” role. Indeed, Xi Jinping promoted China’s full modernization by 2049, betting on technological and economic leadership. The competition is built around an economic and strategic pillar strengthened during the pandemic by the idea that economic interdependence might be weaponized.

On April 26, 1956, a converted oil tanker called Ideal-X departed Newark, New Jersey, carrying 58 aluminum containers on its deck. This voyage, which ended in Houston, Texas, received little attention at the time, but it gave birth to an industry that would reshape the world economy. Today, more than 5,300 container ships sail the seas.

With the impact of climate change on Arctic sea ice, several comments have been published to the effect that diminishing sea ice would quickly translate into the development of massive transit routes across the Northwest Passage (NWP) and the Northern Sea Route (NSR).

On March 23, 2021 the 20,000 TEU vessel Ever Given ran aground and wedged itself across the Suez Canal, all traffic through one of the world’s most critical waterways came to a halt. A highly reported race to free the stuck ship began almost immediately as did the recriminations to the cause of the stranding.

Panama’s maritime business is being transformed by the complex interaction between multiple factors.  These include the growing economic and political power of China and US-China competition, the long-term structural impacts of Covid-19 on both the region and global trade, US policies to contain immigration from the Northern Triangle, climate change, the rise of leftist populism in the region, the China-Taiwan competition, technology trends, evolution of regional infrastructure, and the restructuring of the maritime shippin

Covid-19 triggered a significant contraction of international trade flows, disrupting global value chains and putting maritime logistics and transport under severe stress. Moreover, in 2021, accidents including the Ever Given container ship being stuck in the Suez Canal have raised questions around the long-term sustainability of an hyper-globalized trade system that is based on just-in-time mechanisms.

For over a decade, rare earths have emerged as a crucial commodity in the race for the geo-economic dominance of this century, and that is not by chance. As a matter of fact, rare earths are fundamental for the development of the new technologies that will enable the green revolution envisaged by the international community’s climate change efforts.

Global foreign direct investment (FDI) flows fell by 35 per cent in 2020 to $1 trillion, from $1.5 trillion in 2019 (World Investment Report 2021). This is the lowest level since 2005. The pandemic has hit hardest developed economies (-58%) while developing countries proved relatively more resilient (-8%).

The COVID-19 pandemic, aside from being a health disaster, was a huge economic shock to the world economy. All G20 countries had negative GDP growth in 2020, except for China, which eked out a 2.3% expansion. All these major economies, and most smaller ones too, carried out Keynesian counter-cyclical fiscal and monetary stimulus policies.