Disappointing global growth means shipping industry remains ‘challenged’

BIMCO Chief Shipping Analyst, Peter Sand says that the updated World Economic Outlook from the IMF suggests that the shipping industry could be in for even more doom and gloom in the coming months
Disappointing global growth means shipping industry remains ‘challenged’

The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. Shipping being a derived demand of global economic growth, will see lower demand in coming years, all other things being equal, than what was previously expected. This goes for all the major shipping segments, dry bulk, tankers and containerships.

The Update of the World Economic Outlook from the International Monetary Fund (IMF) has just been released. Headline global GDP growth is revised downwards by 0.1 and 0.2 for 2014 and 2015 respectively to reach 3.3% and 3.8%. 

The IMF points out that global investment has been weaker for some time now, limiting the prospects for higher growth going forward. This has led to a lowering of 2015 expected growth more or less across the board. Moreover the burden from the recent years of crisis still haunts, primarily the advanced economies. Whereas several emerging and developing economies which are running at a higher growth level, are been dragged down by poor export markets.

1. The US is expected to grow by 3.1% up by 0.5 from IMFs most recent July estimate. Employment numbers are strong, so now we higher wages are anticipated to follow suit soon in order to develop a sustainable economy for the future

2. In the Euro Area, German, France and Italy are all revised downwards by 0.4-0.5. This leaves Italy in negative territory for the third year running, at -0.2% for 2014. France is now expected to grow by 0.5% and Germany by 1.4% in 2014.

3. Forecast for India is up by 0.2% to 5.6% with China hanging in there at an unchanged 7.4% for 2014.

4. Finally, Russia is expected to take more hardship from its involvement in geopolitical uncertainties with Ukraine. IMF halved its forecast for 2015 growth in Russia now seen at 0.5% with 2014 still staying above water at 0.2%.

Chief Shipping Analyst at BIMCO, Peter Sand, said: "The revised forecast from IMF was somewhat anticipated but the wide spread negatives seems to outweigh the positives this time around.

“Shipping being a derived demand of global economic growth, will see lower demand in coming years, all other things being equal, than what was previously expected.

“For container shipping it is positive that the US is now set to grow stronger even though demand from Euro Area weight in the other direction the sum of the parts are still positive."

New data on key indicators sheds light on present, near-term and future shipping market.

Read more in BIMCO's Macro Economics Report. 

Disappointing global growth means shipping industry remains ‘challenged’

by Peter Sand

Chief Shipping Analyst at BIMCO

Peter Sand joined BIMCO in 2009 and holds the position of Chief Shipping Analyst. In this position he is responsible for analysing the commercial markets for dry bulkers, tankers and containerships. Taking the offset in global economics as the analytical starting point for all seaborne trade, he assists management and members with insight into many different aspects of the shipping industry. Peter’s regular reports and interim focus articles on the shipping market are widely read and have often been referenced in mainstream media.

Tracker Pixel for Entry