On December 5, Vietnamese official media published an article saying that in recent months, many business owners have been away from the office. They are traveling around Vietnam and abroad, hoping to find new orders and new customers. The original orders have almost been processed, but new orders have not yet been received. Many companies have to arrange for employees to work in shifts; some companies have reduced the startup of production lines.
However, the difficult days did not stop there, and it was not just production and operation companies that encountered difficulties. Ngo Ngoc Khanh, executive vice chairman of the Vietnam Enterprise Assistance Alliance (VISA), said that in the enterprise assistance alliance, some companies with hundreds of employees had to reluctantly lay off employees, leaving only 25 employees. The new orders just received require investment in new production lines and the adoption of new processes; the company is doing everything it can to mortgage its assets, but there is no way to get new loans from banks.
Orders in Vietnam’s textile industry have also dropped sharply, and it is common to have one day at work and one day off. This year is different from last year: last year, the COVID-19 epidemic was raging and companies had to let employees rest at home. However, there was no shortage of orders at that time. Therefore, as long as conditions allowed, companies immediately restarted the machines and workers immediately worked overtime. But now, no company can predict when the next order will arrive. Ding Hongqi, chairman of Secoin Co., Ltd. complained: “We have asked Japanese and American customers who have just suspended orders from us and asked them when they can resume normal orders. Their answer is ‘I don’t know.'”
Now, the struggles of businesses and the economy as a whole are becoming a looming issue.
The current situation in Vietnam is no longer an isolated case. Affected by the weakening global economy and reduced orders, more and more workers will join the ranks of unemployed people in the future.
Ten thousand garment workers in Bangladesh are unemployed
Four ready-made garment factories of Bangladesh’s DIRD Group in Mayetpur, Savar, which employ more than 10,000 workers, have been closed indefinitely without any reason given by the sponsors.
It seems instructions from foreign buyers to get goods ready for shipment have created a financial crunch. Export factories are sitting on large unshipped inventories of goods produced in response to orders from foreign buyers. This has resulted in RMG producers being unable to pay wages to their workers and clear dues of their local suppliers.
The closure was sudden as factory workers were denied entry on Saturday and closure notices were hung on all factory doors. The closures include Dipta Apparels, Dipta Garments, DIRD Garments and DIRD Washing Plant. Dipta Apparels is the largest of the four factories with 7,000 workers. Sources revealed that the company was forced to make this decision due to reduced export orders and the factory was also facing a shortage of raw materials.
An employee of Dipta Apparels revealed that there were some issues between the workers and the factory authorities. He said workers were not paid current arrears of wages and dues during the Covid-19 period and holiday payment period. After the mid-level workers went on strike, the management paid one month of arrears instead of the two months that the striking workers had demanded. The negotiations took place on Friday, when DIRD management sent a text message on their mobile phone announcing the closure.
Kabir Hussain, joint secretary of the central committee of the National Garment Workers Federation, told TBS, “It is not clear yet the context or reasons behind the actual closure of the factory and every factory worker owes money to the authorities.”
Pakistan cannot escape the fate of production cuts
The survival of textile enterprises is facing crisis
According to the latest data from the Pakistan Cotton Processing Association (PCGA), as of December 1, Pakistan’s 2022/23 seed cotton market volume of lint cotton was approximately 663,000 tons, a year-on-year decrease of 40.3% from the same period last year (1.111 million tons). There are currently local associations A pessimistic total output forecast of only about 750,000 tons was given. According to data from the United Nations Commodity Trade Statistics Database, Pakistan exported $3.4 billion worth of cotton in 2021, accounting for approximately 6% of global supply. After the sharp reduction in production this year, local agencies currently estimate that they need to import about 7 million bales (about 1.085 million tons) of cotton to meet the cotton gap.
At present, Pakistani textile companies importing cotton are facing problems such as the continued decline of the exchange rate and difficulties in opening import letters of credit, and have to reduce production capacity to control costs. It is reported that the current production capacity of Pakistan’s textile industry is about 50%. However, due to bleak downstream demand and serious inventory accumulation of finished products, it is currently only possible to purchase new cotton on demand, and production is difficult to make a profit.
Global oil prices plummeted by more than 50% to US$40 per barrel…
These may be the seven black swans of 2023
There will be too many black swan events in 2022. High inflation has led to radical tightening by the central bank, geopolitical conflicts have triggered energy crises in many countries, and huge shocks in the currency circle have reshaped the investment philosophy of a generation. Now that 2023 is less than a month away, everyone can’t help but ask, what will happen next year?
In this regard, Eric Robertsen, chief strategist of Standard Chartered Bank, and his team boldly speculated on Sunday that if these seven “black swan events” occur in 2023, the economy and financial markets may face a storm, but the market does not seem to have responded to this yet. Pay attention to.
Among them, the Federal Reserve may lower the benchmark interest rate by 200 basis points, global oil prices plummeted by more than 50% to US$40 per barrel, and Bitcoin suffered another round of crashes and fell by another 70%.
1. The Fed may make a 180-degree turn
Standard Chartered Bank believes that the first black swan event may come from the Federal Reserve. Unlike the rapid advancement on the tightening path this year, the Fed may change its attitude 180 degrees in 2023 and quickly shift to a loose stance.
After raising it by 350 basis points in 2022 and now shrinking its balance sheet by $95 billion a month through QT, the Fed may cut its benchmark interest rate by 200 basis points next year. Because after implementing aggressive monetary policy, the United States will fall into a severe economic recession in the first half of next year.
Eric Robertsen’s team believes: The economy may only have some problems at the beginning of next year, but it will soon fall into panic… Layoffs will spread from technology companies to real estate, retail, industry and the financial industry. The Robertsen team also added: The pause (rate hikes) will soon become a turning point, and then evolve into a full reversal of policy in the middle of the year…Before the end of 2023, the FOMC may suspend QT and cut interest rates by 200 basis points.
2. Once oil prices fall to $40…
The looming specter of recession may not only prompt the Fed to pivot but also cause global energy demand to plummet.
In this regard, Standard Chartered Bank believes that the crude oil market may experience an unexpected situation where Brent oil plummets by 50% to US$40. In addition, once the Russia-Ukraine conflict is resolved, the risk premium in oil prices will be wiped out, making oil prices even worse.
Robertsen’s team said: The global economic recession is spreading, and even countries with previously relatively resilient economies will be forced to face a long-term decline in consumer and business demand. They also mentioned that once the Russia-Ukraine conflict is resolved, it will intensify the downward trend in oil prices… This will also cause the risk premium that supports energy prices to disappear.
3. Bitcoin may suffer another round of crash and fall another 70%
Previously, Mark Mobius, the godfather of emerging markets and co-founder of Mobius Capital Partners, warned that the price of Bitcoin has fallen below the technical support level of $17,000. He predicted that Bitcoin will plummet by 40% in 2023, falling below $10,000.
On this basis, Robertsen’s team gave an even more astonishing guess that Bitcoin may plummet by a further 70% to a low of $5,000.
Standard Chartered Bank believes that the widespread impact of the collapse of the “trigger” FTX has led to a significant decline in cryptocurrency liquidity, causing “all losses” to the entire market.
4. The euro surged and U.S. stocks plummeted, and the Internet bubble burst again.
In addition to the three major black swan events mentioned above, Standard Chartered Bank also boldly speculated on four other events that may impact the global market, namely:
After the resolution of the Russia-Ukraine conflict, the exchange rate of the euro against the U.S. dollar rose by 19%, reaching 1 euro to 1.25 U.S. dollars.
The Nasdaq 100 index of the U.S. stock market plummeted by 50% again, technology companies suffered a wave of bankruptcies, and the dot-com bubble burst in the 2000s happened again.
Global food prices have fallen by about 15%, leading to oversupply and deflation.
Republicans in the U.S. House of Representatives voted to impeach U.S. President Joe Biden, hampering the Democratic Party’s momentum ahead of the 2024 presidential election.
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