The Week in Trade: Recessions, Valentine’s Day flowers imports and Red Sea hits SMEs

Fri 16 Feb 2024
Posted by: Danielle Keen

The last week saw less than positive trade stats for the UK amid a recession announcement, a potential boost to the movement of people through Japan and, naturally, a boost to flowers imports for Valentine’s Day.

The big picture: The big picture looked a little stormy this week, as two G7 economies formally enter recessions. The UK posted a GDP contraction of 0.3% yesterday (15 February), while Japan posted 0.4% and ceded its position as world’s third-largest economy to Germany.

It’s not all been good news for Germany, as the government issued a reprimand to businesses after figures released this week showed record levels of investment in China, reaching US$12.7bn last year. This occurred despite an EU-wide effort to reduce dependency on China, underscored most recently by targets to increase domestic European manufacture of renewable energy products.

This wasn’t the first instance of dissent in the bloc this week, as Spain and Ireland pushed for a review of the EU’s trade agreement with Israel. Following the IDF’s military assault on Rafah in South Gaza, Spanish prime minister Pedro Sanchez and his Irish counterpart Leo Varadkar both called for a review of whether Israel’s actions violated the human rights clauses of the agreement.

Good week/bad week: A good week for those who fancy living in Japan. As the country's population dwindles and economy struggles, Japan's immigration levels have risen The country is soon to release a digital nomad visa, which removes the tax burden on international workers and their employers, incentivising tourism.

It was a bad week for SMEs exporting via the Red Sea. Reuters released a report on the hit taken by smaller Indian firms struggling to export amid the disruption, shining a spotlight on the challenges faced by small firms without a supply chain to nearshore in the event of a crisis.

How’s stat? 2%. The boost to Indonesia’s stock market as the unofficial results of its presidential election were announced. Continuity candidate Prabowo Subianto is believed to have won just shy of 60% of the first-round vote, held Wednesday (14 February). Markets may have cheered but there are expectations of student protests – the Valentine’s Day treats handed out at polling stations apparently not enough to counter claims of voter intimidation.

The week in customs: Dover Port Health Authority (DPHA) is currently readying itself for gangs of meat smugglers attempting to sneak past new border checks under the Border Target Operating Model (BTOM), the Guardian reports. DPHA is reportedly considering legal action against the government, which it holds responsible for its decision to move the border control post away from the port.

Quote of the week: “[Since Covid-19] international trade as a share of GDP has rebounded strongly, despite the fears of discriminatory geo-economic fragmentation and protectionism.”

Despite concerns about increasing tariffs and growing international tensions, IMF economist Serhan Cevik in still optimistic for international trade’s recovery.

What else we covered this week: Richard Cree covered Nigeria and the UK signing an Enhanced Trade and Investment Partnership, while Phil Adnett wrote up the critical response from within the Nigerian legal sector, as increased UK services access is a key feature of the agreement.

William Barns-Graham surveyed the UK’s recent economic stats that ushered in an official recession and Benjamin Roche dug into inflation data, which shows the UK holding at 4%, defying predictions of a rise.

True facts: Wednesday was Valentine’s Day which sees a significant boost to the number of roses shipped around the globe. Over 250m roses are grown for the holiday – which is enough to line the Earth’s circumference if they were placed tip to head.

How many are making it across the UK’s border in light of new sanitary and phytosanitary (SPS) checks, florists report a mixed experience.