Brexit will be one of the central topics for economic commentators for at least two years

2 august 2016

The Analytical Center published a new bulletin on current trends of global economy "Taking the pulse: Britain's new government. Focus: Panama Canal Expansion".

The experts note that for at least two years, until withdrawal negotiations are concluded, Brexit will be one of the main topics for economic commentators. “Continuation of the current free movement of labor, goods and capital between the UK and the EU is going to be the key issue in the negotiations for Britain”, the experts say. In their view, Brussels will seek to maintain its position and adhere to EU regulations, but to deprive London of certain benefits. The latter is due to the need to prevent other countries' attempts from leaving the EU under favorable terms. This factor will play an important role in the negotiation process, the analysts say.

The issue also discusses recent trends in world seaborne trade. According to the experts, the opening of new locks of the Panama Canal on June 26, 2016, which doubled the Canal's capacity, will strengthen the canal's position in competition with major long-distance trade routes, including container shipping lines from China, Japan, and the Republic of Korea to the east coast of the United States. But the main feature, that is quite common to many large and long-term infrastructure projects, is that the development of new opportunities will take place in strongly altered conditions, in particular, with growth in world trade less dynamic than it was before 2008.

The opening of new locks of the Panama Canal will strengthen its competition with the Suez Canal, the experts believe. At the same time the Panama Canal has obvious advantages over the Suez Canal: higher degree of political stability in the Central American region compared to that of the Suez Canal region and lower transit fees.

The analysts consider that in the distant future - with adequate development of related infrastructure - the two most important waterways in the world can face competition from the Russian Northern Sea Route and its Canadian counterpart - the Northwest Passage. After the expected completion of the Nicaragua Canal in 2019 (that is located in Central America like the Panama Canal and connecting the Pacific and Atlantic oceans). Opening of the Nicaragua Canal can provoke increased competition among trade routes between Atlantic ports of the Americas and Asia. For world trade in general, in the long run all of these projects will reduce transportation costs.  But the results of competition between them will be revealed much later, the experts say,

For more information see the bulletin "Taking the pulse: Britain's new government. Focus: Panama Canal Expansion"

Other issues of the Bulletin on current trends in world economy can be found in the Publications section.