El Nino causes the economy to heat up

**Luke Wilson** (0:00)
The El Nino weather event hits global trade and food production. It's World Business Express from the BBC World Service. I'm Luke Wilson. Inflation speeds up in Japan, fueling calls for a hike in interest rates, and the US puts even more economic sanctions on Cuba.
Meteorologists are warning that a developing El Nino weather event, which pushes up global temperatures and can make extreme weather more likely, could be the strongest in living memory. Coupled with the effects of climate change, scientists say it's very likely that next year will be the hottest on record, and we're already seeing some impacts. The operator of the Panama Canal, the critical trade route used by 14,000 ships a year, says next month it's going to cut the daily number of vessels passing through to 32 from the current level of 36 because of low rainfall caused by El Nino. Ivan Jimenez is the canal's transit planning and reservation manager.

**Ivan Jimenez** (1:04)
We're going to reduce some slots, and that will be affecting the logistic chain across the globe.

**Luke Wilson** (1:13)
Are you going to have to look at how to keep operating the canal if these weather events and the severity of them get worse and they become more frequent?

**Ivan Jimenez** (1:25)
Yeah, that's basically one of the main reasons we start saving water since December last year. Just taking precautions and thinking for the future, how to sustain the operations in an efficient way.
Also taking into consideration that one of the main goals of the water that we have in the lakes is to supply water for the human consumption of the population.

**Luke Wilson** (1:50)
How do you prioritize which ships get through in situations like this?

**Ivan Jimenez** (1:55)
We will try to distribute the slots, the available slots, between the customers, trying to give all customers the possibilities to obtain a booking slot to go through the Panama Canal.

**Luke Wilson** (2:10)
What might this mean for global trade? Marco Forgione is Director General at the Chartered Institute of Export and International Trade.

**Marco Forgione** (2:18)
Panama Canal accounts for about 5% of global shipping, but about 40% of US container shipping. It has a huge impact, particularly on the US.
The countries that are going to be most affected are Peru, Chile and those South American, Pacific based countries who've got huge European marketplaces. The biggest impact will be on America, it will be on Central America and on South America. For about 10% of the transits, you enter an auction to find a slot. And in normal times, that's about $130,000, $140,000 per transit. Recently, a shipper paid $4 million to transit. So you can see there's a dramatic increase in costs.

**Luke Wilson** (3:01)
And it's not just trade. India is, for the first time in a decade, importing sugar in an attempt to rein in local prices that are up 40% in recent months. India is the world's second-largest sugar producer and exporter, but reduced rainfall has affected supplies, the BBC's Archana Shukla reports.

**Archana Shukla** (3:20)
Sugar prices in the local markets have jumped 40% in the last two months, retailing at just more than half a dollar per kilo. The government wants to stabilize them before the upcoming festive season when demand for traditional sweets peak.
India was still exporting sugar as recently as May, but less rain due to El Nino has hit sugarcane production, and the industry is redirecting spare capacity to ethanol-based fuels, squeezing supplies. With lower production in hubs like Brazil and news of India importing, international prices have already ticked up.

**Luke Wilson** (3:50)
The BBC's Archana Shukla. Let's have a look at the financial markets with Randeep Somal, Fund Manager at M&G Investments, and Samsung says it's going to return $80 billion to its shareholders, Randeep.

**Randeep Somal** (4:04)
That's right, Luke. Samsung, newly part of the $1 trillion market cap.
Club, has seen its share price rise 125% this year, and it's churned out $100 billion in operating profit in the first half. So $80 billion of that is going to come back to shareholders. That's the second largest ever return of capital to shareholders after Apple in 2024 So it just shows how strong the memory demand has mean from data centers.

**Luke Wilson** (4:30)
And it's been a bumpy few days for US markets. How is it looking? They'll end the week.

**Randeep Somal** (4:36)
It's positive today. It's positive today. We've actually seen more drama on the fixed income side, i.e. the US bonds with the US Treasury Secretary that he's saying he's going to be in the market buying bonds at a rate of $32 billion a quarter. Bond yields are up and they want to try and get the prices of those down to keep the costs of borrowing down.