Shipping stress rises

<p>Kia ora,</p><p>Welcome to Monday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with the world waiting for a high tide and a full moon in Egypt.</p><p>While dramatic, and the so-far six-day Suez Canal blockage will have a global impact, especially on shipping issues and costs, it is a crisis that will affect Europe the most (and play heavy in their media). It will have a much lesser impact on us. And we shouldn't overplay it at this time.</p><p>The <a href="https://tradingeconomics.com/commodity/baltic" target="_blank"><strong>Baltic Dry Index</strong></a>, which tracks rates for capesize, panamax and supramax cargo ships, fell -22 points on Saturday, or -1%, its lowest since March 17. But it is still at an 18 month high in a run-up that started five months ago and essentially doubling since then. Pre-pandemic it was an index at 400; now it is at 2178. But recall that just before the GFC it had reached its record high of 11,793. The pricing for these heavily capital intensive vessels can get very extreme very quickly. It is a market that is 'normally volatile'.</p><p>According to <a href="http://www.interest.co.nz/sites/default/files/embedded_images/9781464817021.pdf" target="_blank"><strong>a new upgraded forecast</strong></a> by the World Bank, China’s economy is expected to increase +8.1% this year, after growing +2.9% last year.</p><p>To help keep up the momentum, China <a href="https://www.ndrc.gov.cn/" target="_blank"><strong>announced</strong></a> 24 new measures to boost new types of consumption, including accelerating "new infrastructure" construction, and a rollout of pilot programs for the sovereign digital currency, all as part of efforts to drive domestic demand.</p><p>Chinese <a href="http://www.stats.gov.cn/tjsj/zxfb/202103/t20210326_1815690.html" target="_blank"><strong>industrial profits surged</strong></a> in the first two months of 2021. Of course, a