Global slowdown impairing Pakistan’s external trade

Pakistan Bureau of Statistics has released its monthly exports and imports numbers for the month of October 2022. The data showed country’s trade deficit shrinking 19.8%MoM and 40.4%YoY during the month under review. On cumulative basis, the trade deficit has eased off by 26.2%YoY during 4MFY23.

The improvement in balance of trade during 4MFY23 largely comes on the back of easing import bill, which has come off by 12.4%YoY during the period under review to clock in at US$21.1 billion. Exports have actually posted a slight increase of 1.1%YoY to settle around US$9.6 billion.

Country’s largest export oriented sector, Textiles and clothing has reported a decline of 1.3%YoY during 4MFY23 and remained at US$5.9 billion as compared to US$6.0 billion during the same period of last year.

Cotton yarn exports registered 27.7%YoY decline in July-October to US$285.315 million as compared to US$394.8 million during the same period last year.

Bed wear exports declined by 9%YoY to US$1.0 billion from US$1.1 billion during the same period.

As against this, Knitwear exports increased by 7%YoY to US$1.7 billion which contained the overall decline in textile exports.

Moving forward, the outlook of textile exports remain hazy owing to unavailability of gas to the sector during winters and a global slowdown expected to impact demand.

Country’s import bill continued to contract, declining by 16%YoY owing to slowdown in economy and high base effect.

The largest declines were registered in the categories of Petroleum and machinery groups imports, posting declines of 47%YoY and 40%YoY respectively and were the key reason for an overall decline in imports.

Food imports grew by 10%YoY during the period under review to US$3.4 billion owing to higher Wheat (local crop destruction) and Palm Oil imports (shift from crude imports to refined imports).

With global economy heading towards a slowdown as the major central banks around the world jack up their interest rates, the quantum of world trade is likely to contract significantly.

The global commodity prices are also likely to ease off significantly which bodes well for Pakistan.

Conversely, the country’s exports will also contract as the country’s largest export oriented industry struggles against the unavailability of gas. Consequently, analysts expect FY23 to close with a CAD of 3% of GDP.

Nancy Pelosi era comes to an end

After leading the Democrats for the last two decades, the House Speaker announced Thursday that she will step down next year from her spot at the top of the party. It is a momentous run for the most powerful woman in the US history, clearing the way for a younger generation of up and coming lawmakers to climb into the leadership ranks.

The announcement, which came shortly after late midterm results had officially flipped House control to the Republicans, sent shockwaves across Capitol Hill, as lawmakers in both parties grappled with the thought of a Democratic House without Pelosi at the helm. 

Yet the departure is only partial, Pelosi may cede her formal leadership seat, but will remain in Congress indefinitely, where she’s aiming to assume a mentorship role and grease the transition for whichever new leader fills the mantle. Such a role would be unprecedented in modern memory — most leaders who step down quickly leave Congress — but Pelosi is not one to do things by the book. 

The House chamber during Pelosi’s speech was a study of partisan contrasts. While her Democratic allies packed into their side of the chamber, filling almost every seat, the Republican side of the chamber was virtually empty — a sign of just how polarized Congress has become in recent years.  

Only a handful of GOP lawmakers were on hand for the speech, including Joe Wilson, Tim Burchett, Doug LaMalfa and Young Kim. But a vast majority of Republicans skipped the event, including House Minority Leader Kevin McCarthy. Only one member of the GOP leadership team was on hand, Steve Scalise, the Republican whip, who gave Pelosi a standing ovation at the end. Burchett and LaMalfa later hugged Pelosi. 

Her announcement ends the perennial speculation game surrounding the future of Capitol Hill’s single most powerful lawmaker, and she kept them guessing to the very last. 

After Democrats had staved off a red wave in this year’s elections, there was plenty of talk that Pelosi could remain in power, if she chose, even despite a previous pledge to step out of leadership at the end of this term.

In the end, Pelosi suggested her decision to exit hinged more on the recent assault on her husband, Paul Pelosi, who was bludgeoned with a hammer last month at the family’s San Francisco home by an intruder whose intended target, police said, was the Speaker. 

By remaining in Congress outside of leadership, Pelosi can remain influential as an adviser, fundraiser and vote getting whip while taking a foot off the gas of her famously frenetic schedule — a hybrid role that will allow her to spend more time with her recuperating husband. 

Pelosi has led the House Democrats since 2003, marking the longest leadership run in either party since the legendary tenure of Sam Rayburn, a Texas Democrat, who died in office in 1961. Over those 20 years, she oversaw passage of some of the most significant legislative accomplishments of the last half-century; raised more than US$1.2 billion for the party; and shattered the glass ceiling in 2007, when she became the first woman ever to ascend to the House Speakership — a feat she repeated in 2019.

“She’s a tough, effective, focused, disciplined woman. I wasn’t always on the same side as her — and it’s not pleasant being on the other side of her — but she knew how to bring a disparate group of people together to get the job done,” Rep. Debbie Dingell, a close Pelosi ally, said Thursday morning as Democrats waited anxiously for the Speaker’s announcement. 

Pelosi helped steer the congressional response to the Great Recession; guided the passage of ObamaCare; secured trillions of dollars in emergency relief through the COVID-19 pandemic; and made the decision to impeach former President Trump, not once but twice. 

Pelosi also launched the special investigation into the Jan. 6, 2021, attack on the Capitol, the results of which could reverberate through the legal and political world for many years to come.

“I’m not a House historian, but what I hear from House historians is that she is probably the strongest Speaker of the House we have seen in many, many, many years,” said Rep. Rosa DeLauro, another close Pelosi ally.

“It values, her strategic ability, her knowledge of the system, how to negotiate — all of those really melded into one person, which have forged an unbelievable legislative legacy,” she continued. “And that’s wherein lies her strength . … Someone who knows how to get from A to B, with a very diverse caucus.” 

Part of that legacy will be this year’s midterm elections. Heading into the polls last week, Republicans were expecting a rout, one that would lend them a considerable majority to do battle with President Biden through the last two years of his first term. Instead, Democrats were able to cling to dozens of toss-up seats in battleground districts, limiting the Republican gains and making it harder for GOP leaders to govern next year. 

“This really solidifies her legacy as the most accomplished Speaker in U.S. history, by all measures — all measures,” Ashley Etienne, Pelosi’s former communications director, said of Pelosi’s role in the Democrats’ midterm performance. “There’s no question.”

Pelosi’s decision will clear the bottleneck that’s existed at the very top of the Democratic Caucus since 2003, when she and her top deputy, Steny Hoyer, assumed the leading spots. James Clyburn would join them in 2006 in the No. 3 slot, where he has remained ever since. 

Neither Hoyer nor Clyburn have ruled out bids to remain in power in the next Congress. But a younger group of up-and-coming Democrats is eager to climb the leadership ladder, or just get into the ranks.

Three current members of leadership — Hakeem Jeffries, Katherine Clark and Pete Aguilar — are expected to launch bids for higher spots at the first opportunity.

Jeffries, a member of the Congressional Black Caucus, is widely viewed as the favorite to replace Pelosi and Joyce Beatty, who heads the Black Caucus, predicted Thursday that every member of that group would back Jeffries.  

But Hoyer, after almost 20 years right behind Pelosi, has raised tens of millions of dollars for the party over the years, building his own loyal following along the way.

 

Iran hit tanker, says Israel

Iran attacked an oil tanker connected to an Israeli businessman in an attempt to distract from a failed assassination plot against an Israeli businessman in Georgia, Israeli officials said on Wednesday.

The oil tanker, the Pacific Zircon, is a Liberian-flagged ship operated by Singapore-based Eastern Pacific Shipping, which is owned by Israeli billionaire Idan Ofer. The tanker itself is owned by Japanese firm Taihei Kaiun Company, according to Lloyd’s List Intelligence. A statement by Eastern Pacific confirmed that the vessel, sailing in the Gulf of Oman, had been hit by a projectile, lightly damaging the hull. No injuries were reported in the attack.

Israeli officials said the Israeli connection to the tanker was very limited. They added that the same type of Iranian drone being used by Russia in Ukraine, the Shahed 136, executed the attack.

“This is another event that proves that Iran acts as a global exporter of terrorism. This is another time that Iran is harming global freedom of navigation,” said the officials. “Iran undermines security in the Gulf and, along the way, undermines stability during the World Cup,” which starts on Sunday in Qatar.

Iranian Nour News, affiliated with Iran’s Supreme National Security Council, accused Israel and its Gulf allies of targeting the tanker in an attempt to transfer difficulties surrounding forming a government in Israel and to raise tensions and distract Iran and Qatar with marginal events.

The US Navy’s Fifth Fleet was aware of the incident, Commander Timothy Hawkins said, and National Security Advisor Jake Sullivan condemned the attack, saying Iran likely conducted the attack using a UAV.

“There is no justification for this attack, which is the latest in a pattern of such actions and broader destabilizing activities. This action further threatens freedom of navigation through this crucial waterway, international shipping and commerce, and the lives of those on the vessels involved,” said Sullivan.

US Central Command confirmed that an Iranian Shahed-series drone hit the vessel. “This unmanned aerial vehicle attack against a civilian vessel in this critical maritime strait demonstrates, once again, the destabilizing nature of Iranian malign activity in the region,” said US Central Command (CENTCOM) commander General Michael Erik Kurilla.

The United Kingdom Maritime Trade Operations said an investigation was ongoing.

“UKMTO are aware of reports of an incident in the Gulf of Oman/Arabian Sea... Vessel and crew are safe,” it said on its website.

According to ship tracking site MarineTraffic, Pacific Zircon was last seen off the coast of Liwa, Oman, on Monday morning. It departed from Sohar, Oman, on Monday afternoon with its destination set as the Port of Buenos Aires.

The ship last reported signaling its position near the Gulf of Oman on Tuesday, according to Bloomberg.

The reported Iranian attack came as three Iranian vessels were headed for the coast of Syria.

On Wednesday morning, the Iranian Azargoun container ship arrived at the Port of Latakia on the coast of Syria, according to vessel tracker MarineTraffic. The vessel is subject to US sanctions.

The Iranian Arman114 and the Lotus oil tankers were also reportedly headed towards the Syrian coast in recent days, with satellite imagery showing the two departing the Suez Canal into the Mediterranean.

Last year, Iran and Israel blamed each other for a string of attacks targeting each other’s vessels. Iran has long sought to target ships it thinks are linked to Israel.

In February 2021, the MV Helios Ray was hit by an alleged Iranian attack in the Gulf of Oman.

In March 2021, an Iranian ship, the Shahre Kord, was damaged by an explosion, with Iran blaming Israel for the incident. Shortly before the attack, The Wall Street Journal reported that Israel had attacked about a dozen Iranian ships carrying oil to Syria. Additionally in March 2021, an Iranian missile was fired at an Israeli-owned ship in the Arabian Sea, hitting and damaging it.

In April 2021, Israel was blamed for attacking the Iranian Saviz ship in the Red Sea. The Saviz was reportedly used by the IRGC as a forward base.

In July 2021, two crew members were killed when Iran struck the Mercer Street oil tanker in the Gulf of Oman. While the vessel is owned by a Japanese company, it was operated by the London-based Zodiac Maritime, part of Israeli billionaire Eyal Ofer’s Zodiac Group.

Less than a week after that attack, Iranian forces reportedly attempted to hijack the Asphalt Princess tanker off the coast of the UAE, but fled the ship after workers sabotaged the engines, according to The Times.

US Centcom alleges Iranian made drone hit tanker off Oman

An attack on a tanker off the coast of Oman on Tuesday was carried out by an Iranian-made drone, US Central Command said in a statement, adding that a multilateral maritime operation led by a British Royal Navy frigate had responded to the area.

An Israeli official had blamed Iran for the strike on the Pacific Zircon tanker managed by Israeli-controlled Eastern Pacific Shipping. The company said there was minor damage to the hull but no injuries or spillage of the gas oil cargo.

A White House official earlier said the United States was confident that Iran likely conducted the hit using an unmanned aerial vehicle. Iran's Nournews, which is affiliated with the country's top security body, blamed Israel for the attack.

US Central Command said in a statement late on Wednesday that debris reveals that it was a Shahed-series one-way attack drone that hit the vessel, identifying it as Iranian-made.

This unmanned aerial vehicle attack against a civilian vessel in this critical maritime strait demonstrates, once again, the destabilizing nature of Iranian malign activity in the region," the Central Command statement said.

It said a multilateral operation responded to the scene led by the British Royal Navy's HMS Lancaster. US Navy guided-missile destroyer USS The Sullivans and a US Navy patrol coastal ship and patrol craft were involved in the operation.

Attacks on tankers in Gulf waters in recent years have come at times of heightened regional tensions with Iran.

In July 2021, a suspected drone attack off Oman's coast hit a petroleum product tanker managed by an Israeli firm. Iran denied the accusations that it was responsible.

 

 

 

 

 

US rail strike looms again

The possibility of a rail strike in United States is started looming again as three unions members reject a tentative deal hammered out in September.

In mid-September, the Association of American Railroads (AAR), representing the large ‘Class 1’ railroads in the US, had tentatively agreed with a group of 13 labour unions on a deal, that would have averted a threatened work stoppage. These unions represent more than 100,000 workers.

The agreement allowed for a months-long period in which the unions could vote to ratify the agreement- or not. With less than a month until that deadline, a third union, the International Brotherhood of Boilermakers has rejected the agreement. While it has a relatively small member count, they perform vital repair work on locomotives.

Last month, two unions with much larger headcounts- representing track maintenance and signal maintainers, had both voted to reject the deal hammered out during September.

While negotiations with these unions continue, the threat of a strike is looming and this could come during the first week of December. As is the custom with labour matters, other unions (even those that had voted yes on approval) would respect the picket lines of the naysayers.

Two large unions, representing the actual employees on the trains, now whittled down to two person crews in many cases- on trains in excess of a mile in length, are scheduled to vote, just prior to the Thanksgiving holiday at end November. While the agreed upon wage increases are viewed as hefty, the sticking point continues to be work rules- labor practices impacting a workforce stretched thin.

Early in the pandemic, with slumping demand, there were many worker retirements; as demand ratcheted back in late 2020/ early 2021, hiring of workers did not keep pace- so the existing workforce has been stretched thin. Practices such as ’Precision Railroading, which has led to increased scrutiny of the carriers, have added to the pressure on workers.

The impact of a strike, which would quickly back up in the supply chain to warehouses, distribution centers, and storage facilities, is what is on the minds of cargo shippers, ports, and vessel operators alike. Though numbers are imprecise, analysts estimate that roughly 30% of US freight would find its way onto the rail network; rail industry insiders suggested that a strike would have a cost, initially, of US$2 billion per day on the US economy.

The timing is tricky; it comes shortly after the US midterm elections- with the make-up of Congress, including committees that interface with transport matters, set to shift gears. In a media interview with the CNN network, the Secretary of Labor, Marty Walsh, appointed by the President, so he stays in his job for another two years, or longer- if the Democrats prevail in 2024, had said if, “for some reason [one of the unions] doesn’t get to an agreement with the companies then … Congress will have to take action to avert a strike in our country”.

The labour and rail management are continuing to talk; indeed, for one of the bigger unions, it pushed back its previous deadline for calling a strike from late November into early December. The good news, for those thinking optimistically- is that they are still talking.
 

 

 

British PM Sunak extends support to Ukraine

British Prime Minister Rishi Sunak on Tuesday extended his support for Ukraine at the G20 summit while confirming a long-planned order for warships from BAE Systems.

The announcements come as Britain prepares for a budget on November 17, 2022 in which the government will lay out spending cuts and tax rises.

Russian President Vladimir Putin's regime would hear the chorus of global opposition to its actions, Sunak said.

"Russia's actions put all of us at risk," he said at the summit in Bali, Indonesia. "As we give the Ukrainian people the support they need, we are also harnessing the breadth and depth of UK expertise to protect ourselves and our allies."

Sunak also announced a 4.2 billion pound (US$4.94 billion) contract to BAE Systems to build five ships for the Royal Navy, a government statement said.

This contract, in addition to the three ships already under construction, comes as the next phase in the Type 26 frigate program and all the eight of the Type 26 frigates are expected to be completed by the mid-2030s, the statement said.

The British government has planned to build a total of eight Type 26s since 2015, when it cut the program from 13 ships.

Ships of the class will be advanced warships to be used in anti-submarine warfare to protect the British nuclear deterrent at sea, according to the government.

The prime minister and fellow leaders would stress at this week's meeting that Russia's role in the international system would never be normalized while the war in Ukraine continued, the statement added.

Sunak arrived at the summit in Bali, Indonesia, on Monday for a meeting that Russian Foreign Minister Sergei Lavrov will also attend.

In support to Ukraine, Britain said last week it would soon complete delivery of 1,000 additional surface-to-air missiles to the Ukraine's armed forces. Britain also announced delivery of a further 12,000 sleeping kits for extreme cold weather.

 

United States shuns Iran nuclear talks

Iran's crackdown on protesters and the sale of drones to Russia have turned the United States focus away from reviving a nuclear deal, Washington's special envoy for Iran said.

Speaking to reporters in Paris, Robert Malley insisted that the United States would leave the door open to resume diplomacy when and if the time came, but for now Washington would continue a policy of sanctions and pressure.

Talks to revive a 2015 accord between Iran and world powers have been at a stalemate since September. 

Western states accuse Iran of making unreasonable demands after all sides appeared to be nearing a deal.

"If these negotiations are not happening, it's because of Iran's position and everything that has happened since September," Malley said.

"Our focus is not an accord that isn't moving forward, but what is happening in Iran ... this popular movement and the brutal crackdown of the regime against protesters. It's the sale of armed drones by Iran to Russia ... and the liberation of our hostages," he said referring to three American nationals held in Iran.

Anti-government protests broke out in September over the death of 22-year-old Mahsa Amini while she was in police custody. The European Union, the United States, Canada and Britain have imposed sanctions over human rights abuses in Iran as well as for its drone sales to Moscow.

Iran has continued its nuclear program, installing hundreds more advanced centrifuges. The machines enrich uranium, increasing the country's ability to enrich well beyond the limits set by the 2015 deal. Iran began breaching those terms in 2019 in response to a US withdrawal in 2018 under then-President Donald Trump.

The 2015 agreement limited Iran’s uranium enrichment activity to make it harder for Tehran to develop nuclear arms, in return for lifting international sanctions. Iran denies wanting to acquire nuclear weapons.

Malley declined to give a timeframe on how long Washington would accept the status quo, but said if diplomacy failed the United States was ready to use other tools.

"If Iran takes the initiative to cross new thresholds in its nuclear program, then obviously the response will be different and coordinated with our European allies," Malley said, without elaborating.

"There is no magic in which we will find a new formula." Diplomats said Malley would hold talks in Paris with French, German and British counterparts on Tuesday.