$53 million in Luxury Cars Lost At Sea

I came across an interesting story that was posted January 6, 2015 about how the cargo ship Hoegh Osaka, destined to the Middle East with $53 million in luxury cars, never completed it's delivery. Shortly after the Hoegh Osaka began its journey from Southampton, it began to list (tilt). This can happen if cargo shifts, or is unevenly loaded. The crew made a critical decision to run the ship aground not far from Southampton to prevent capsizing. Then, it was a race against time to stabilize the ship before being swept out to sea.

Once the Hoegh Osaka was returned to port, there was an investigation of the crisis while the cars were driven off the ship. There was speculation that the cargo was unstable when it left port. So what does this mean for the car manufacturer and exporter? Will the cars become scrap due to potential safety issues from damage unseen? Check out the links below to read more about this event.

http://www.businessinsider.com/nearly-400k-worth-of-luxury-cars-may-be-scrapped-from-tilted-cargo-ship-2015-1

http://www.bbc.com/news/uk-england-hampshire-35823182

http://www.bbc.com/news/uk-england-hampshire-31002891

Commodities Spike After Missile Strikes In Syria

Commodities like oil and precious metals have stabilized over the past several months after the uptick during the United States Presidential Election. But this has not been the case since the recent missile strike. Gold and silver increased by 1.07% and 1.02% respectively. Oil is up 1.26%. These increases were observed overnight after the attacks. Analysts suggest that even after the spikes in crude oil, the price per barrel should fall back below $50/barrel. As tensions grow in Syria and the Middle East, what will this mean for future oil flows?

Reference:

http://www.businessinsider.com/gold-silver-oil-price-reaction-us-missile-strike-syria-april-7-2017-4

Eric and Dustin

Looking at the Middle East as a market to enter in the retail aspect may be harder than one could imagine.  Using the data collected from NRF, I was able to determine that there were only three companies that have their origins in the region.  They hail from Turkey, UAE, and Saudi Arabia.  That’s three out of the top 250 retailers globally (nrf.com). However, for two alias of Syria, Russia and China, it might be easier for them to enter the market.  Of the 250 global retail leaders, 13 of them hail from these two countries.  Still, that is only 6.4% of the top retailers in the world that would even consider doing business with these countries just based on global military positioning.  It’s an interesting topic to see if the countries that back Syria are concerned with their economical position or if it is strictly based on their weapons capabilities and positions in the Middle East.

Source: C. (2017, January 16). 2017 Global 250 Chart. Retrieved April 12, 2017, from https://nrf.com/2017-global-250-chart

Though Syria and the middle east are known for their oil exports, war and IDPs (internally displaced persons) have taken a toll on the economy.  From the report last updated in October of 2016, we see how many of the many of the middle eastern countries have been excepting or purposing taking funds from foreign entities including the U.S. to help support the growing refugee issue as well as the rebuilding of war torn areas.  This no doubt will have an impact on the areas exchange rate.  I know from personal experience when I was in Iraq in 2009, the Iraqi Dinar was far less of value than that of the U.S. dollar.  I could purchase 5250 Iraqi Dinar for only $5 American.  The situation at the time in Kuwait was considerably better as $5 American would only get you just over 3 Kuwaiti Dinar.  Needless to say, I passed on it.  At the time, Iraq was contemplating scraping their current currency since it was still heavily associated with the former dictator Suddam Hussain, and starting over.  Most of the primary concerns for these countries governments right now is to focus more on the macroeconomics of the country to help combat the issues that they face.  The main driving force for countries like Jordan and Lebanon are to keep schools and infrastructure operational and to help with the rising demand for everyday essentials due to the huge numbers that are flooding in holding refugee status. However, not all is rosy for all businesses. For an example, National Commercial Bank (Ranked #433 on the Global 2000) in Saudi Arabia. For them and other banks in the Middle East, business is down considerably and are suffering cuts in credit ratings due to a down economy.

Reference:

 https://www.forbes.com/sites/dominicdudley/2016/04/03/pressure-is-building-on-saudi-arabias-economy-but-riyadh-isnt-blinking-yet/#79199117e9e1

http://www.worldbank.org/en/country/syria/overview#2

Thanks,

Eric and Dustin

Measuring GDP Proves Difficult During Civil War in Syria

What happens to GDP and other economic data when a country is in civil war? Since the civil war in Syria began in 2011, measuring the country's wealth has become most challenging. The two key factors in measuring a country's wealth are population and GDP. Since the civil war began, the population has been significantly reduced. What was measured in 2010, at 20.7 million people, was reduced by 4.8 million fleeing the country. Approximately 7 million more fled their homes as domestic refugees. By 2014, the population is anywhere between 16 million and 18.8 million. Click HERE to read a good illustration of how measuring wealth of the war-torn Syria has become difficult for world trade institutions.

https://www.gfmag.com/topics/blogs/measuring-gdp-civil-war

Though Syria and the middle east are known for their oil exports, war and IDPs (internally displaced persons) have taken a toll on the economy.  From the report last updated in October of 2016, we see how many of the many of the middle eastern countries have been excepting or purposing taking funds from foreign entities including the U.S. to help support the growing refugee issue as well as the rebuilding of war torn areas.  This no doubt will have an impact on the areas exchange rate.  I know from personal experience when I was in Iraq in 2009, the Iraqi Dinar was far less of value than that of the U.S. dollar.  I could purchase 5250 Iraqi Dinar for only $5 American.  The situation at the time in Kuwait was considerably better as $5 American would only get you just over 3 Kuwaiti Dinar.  Needless to say, I passed on it.  At the time, Iraq was contemplating scraping their current currency since it was still heavily associated with the former dictator Suddam Hussain, and starting over.  Most of the primary concerns for these countries governments right now is to focus more on the macroeconomics of the country to help combat the issues that they face.  The main driving force for countries like Jordan and Lebanon are to keep schools and infrastructure operational and to help with the rising demand for everyday essentials due to the huge numbers that are flooding in holding refugee status.

Reference:

http://www.worldbank.org/en/country/syria/overview#2

Syria Water issues

After reading the article attached, I found that the Middle East, particularly Syria, has issues when it comes to its natural resource of water.  Water is the life sustaining element that everything needs to survive.  With climate changes taking its toll and the fact that this region is susceptible to dry climates, the lack of water creates a wide variety of issues for the country.

                First is that with dry climates, growing of local agriculture is impacted heavily.  This in turn provides a shortage of food for the local populous driving imports of food higher for a country that has over a million-people facing hardship.  With low above ground water available, they seek to irrigate land with ground water, which can be a costly project for both the drilling of wells and electricity used to pump the water to the surface.  Draining the ground water table also takes away from neighboring countries, reducing this natural resource availability for the whole region. 

With climate and water source shortages, this impacts the local government to act in a way that causes more turmoil in country that is already failing.  This leads to a global impact of refugees fleeing the country in search of a better life.  For starters, the country is losing a work force that could find jobs because of a lack of investment in the region.  Then, with the migration of the refugees to other countries, these safe havens that they seek are gaining even more people to add to their work force that takes time to implement.  Part of this is that there are cultural and language barriers that reside in any migration of a foreign populous to a new region. 

Between the conflict of water shortage and a war-torn country, the people of Syria find that their only means to survive is to leave the country and find a better way of life.  Economies of scale and the rapid loss of a population leaves Syria in a tight spot.  Government of this country, unfortunately, are seeing their country fall to pieces and may not be able to recover.  My prediction is the complete collapse of Syria within the next decade, and it being absorbed by one of the major powers that surround the country through a long battle that will be costly on a global scale.

 http://pacinst.org/news/water-drought-climate-change-conflict-in-syria/