ANZ Country Head, Rabih Yazbek, has urged businesses to plan ahead as global supply chains continue to create challenges for operators.

“What’s happening around inflation are all global problems we are importing,” Mr Yazbek said during a press conference yesterday.

The event was centred on discussions to the future of global supply chains and their impact on businesses in Fiji.

“The bottom line is we think it’s going to get worse before it gets better in terms of inflation,” MrYazbek said.

He said businesses needed to stock more than they usually do when the next shipment comes in.

“They need to build more warehouse capacity because they will have a whole more stock and push for price increases where they can.”

Stagflation

The ANZ Chief ’s responses come at a time when global financial institutions like World Bank for instance, revised its global growth forecast in its latest Global Economic Prospects report.

“The war in Ukraine leading to higher inflation, tighter financial conditions,” it said.

“Global growth is expected to slump from 5.7 per cent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 per cent that was anticipated in January.”

“It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn.”

As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend.

“Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation, according to the World Bank’s latest Global Economic Prospects report.”

“This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike.

Reuters, in a report said: “The International Monetary Fund expects to further cut its forecast for global economic growth in 2022 next month.”

“It followed moves by the World Bank and Organisation for Economic Co-operation and Development (OECD) to cut their own forecasts this week.”

“That would mark the IMF’s third downgrade this year.”

“In April, the IMF had already slashed its forecast for global economic growth by nearly a full percentage point to 3.6 per cent in 2022 and 2023.”

Helping Business

Meanwhile, Mr Yazbek, in a bid to help its business clientele brace itself for what was yet to come, said: “Our work as a bank in supporting the economic recovery is to help and fund that working capital.”

Mr Yazbek said everyone who was purchasing anything at the moment sees what’s happening around inflation.

Food inflation has been a hot topic not just in Fiji, it’s a global problem.

“It’s an interesting time.”

It’s challenging to put together your plans and forecast for the next year because you got these big swings coming through in the shipping cost, price inflation. It’s hard to predict.”

Trade And Supply Chains Report

“ANZ Head of Trade and Supply Chain Gareth Coleman highlighting the supply chain report that was released in February,” said everyone thought 2020 was going to be a blue sky year.

“The nature of the report was to see what’s happening in 2020-2021 and everybody thought 2022 was going to be different, things would return to normal.”

“For country like Fiji, you see tourists coming back into the market and people would be spending again and those people that lost their jobs in 2020 would essentially have an opportunity to return to the workforce,” Mr Coleman said.

However he said what the report did not foresee was the Russia and Ukraine situation and how it has affected our primary markets, Australia and New Zealand.

“So there’s really been some challenging situations played out since February when the report was released,” he said.

Ukraine and Russia are collectively responsible for 30 per cent of global grain exports.

Mr Coleman said, Ukraine itself was the 5th largest exporter of wheat  and was very significant in terms of the export of sunflower oil, cooking oil and other grains that were ultimately inputs of the broader food supply chains globally.

“We haven’t seen much of it yet, there’s some level of reservation and this would play out materially, that’s because what has been release to the market was already harvested in 2021, what will be harvested this year will hit the market at the end of the year, that’s when we will see the true effects of food inflation hit our respective pockets as a result of what’s happening in Ukraine.”

He said it would take time to resume to a more normal form.

FMF Foods

In a statement, FMF Foods Limited, said it was focused on two things, supply consistency from its partners in Australia and pricing.

“If we do not get wheat in the country, there will be a shortage of flour, something we can’t afford then we may or may not look at price increasing but making sure that flour is available – that will come as a secondary note.

“Right now there are no concerns for supply.”

“We are secure at the moment.”

The main thing for FMF is to ensure affordability, availability.

Questions were also sent to Punjas and Sons Pte Limited.

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