According to BIMCO’s 2016 report, 2015 never really took off, even though the global economic activity looked stronger earlier in the year.
The negative indicators seen at the end of 2014 were not overcome, and the industry saw a significantly lower level of growth for global GDP in 2015 than in the previous five years. This was primarily due to the struggling emerging markets and developing economies, led by changes in China’s economic focus.
As BIMCO’s hope for a bounce-back in 2016 wanes, shipping should brace itself for yet another challenging year. Despite this, the International Monetary Fund has forecast higher GDP growth rates for 2016 across the board. As China re-evaluates its future growth and direction, the shipping industry can expect an uncertain and lower level of support from one of the most important drivers of shipping demand growth in recent times.
What could turn this around?
Europe and Japan, in particular, look like they might provide positive surprises in 2016. The European Central Bank and Bank of Japan are continuously seeking to boost their economies to bring on the sustainable recovery that everyone needs.
In the US unemployment rates are low and GDP growth is high. This means that higher interest rates may be just around the corner. This could raise prices but could also lead to some ‘cooling off’ for investments and consumption across the globe.
The unpredictability of China’s market forces is really causing some concern. The industry cannot rely on the usual market forces or conditions within some Chinese industries, which is bringing more volatility in shipping demand. What seems certain is that the rebalancing of its economy from investment to consumer-driven growth will also drag down economic growth. This transition is long overdue and – more positively – its greater sustainability should support a steadier level of growth in shipping demand in the future.
Adapted from press release by Joseph Green
Read the article online at: https://www.worldcement.com/europe-cis/22012016/bimco-global-economic-report-366/