Analysts: World economy is stabilising

It seems that the hard-pressed world economy is beginning to stabilise on a lower level than in the boom years in the 00s. This will support the shipping industry according to analysts from Nordea and Bimco.

Photo: APM Terminals

Under the headline “A stabilising world”, Nordea’s morning report states that the world growth is stabilising on a low level which is under all circumstances better than the situation last year. It will also result in more stable conditions for the shipping industry, Bimco tells ShippingWatch.

“The far-sighted economic analyses still provide statistics indicating that the global growth prospects are stabilising on a low level. A tendency which was confirmed by yesterday’s (Thursday 20 September) data from China, the euro zone and the United States. However, it is important to remember that the latest central bank initiatives in the United States, the euro zone and Japan are not expected to affect (if they even will) the economic activities and the employment situation until in the months to come”, the Nordea analysts write.

Chief Advisor in Nordea, Jan Bylov, who is one of the authors of the report, explains the current situation this way:

“If I am to describe today’s situation, I would say that first we see a figure pointing upwards then we see another pointing downwards and then we see a third figure pointing upwards. Thus, the statistics fluctuate much which is a good sign that things have started to stabilise. Therefore, it is not an expression of things moving in upwards or downwards direction. The figures point in different directions meaning that the different segments are developing in a way indicating that the world is stabilising”, Jan Bylov tells ShippingWatch.

Growth in 2013

Furthermore, the report states that Nordea expects growth and fewer risks in 2013. This is very positive for the shipping industry, Bimco Chief Analyst, Peter Sand, tells ShippingWatch.

“Under normal circumstances, developments in the world economy have a delayed effect in the shipping industry as the industry experiences a derived effect of the world economy. Therefore, the world economy will have to get in gear and then we will see the effect on the shipping industry later on. However, there is no doubt that it is high time we begin to see things moving in the right direction again”, Peter Sand says.

He hopes that the year 2012 will be the beginning to the end for the financial crisis starting in 2008. Just like Nordea, he expects that 2013 will be a year of growth even though the growth will not be enormous.

“The year-to-year export growth from 2000 to 2008 was around 7 percent. When we look towards 2013 to 2015 we expect an average export growth of 5.8 percent a year. So we are looking at what we call a new norm. We expect things to stabilise at a lower gearing”, Peter Sand says.

Improving overcapacity

Peter Sand is hoping for a better year for the shipping industry in 2013 or 2014. There is no balance between supply and demand following the high number of ships ordered before the crisis which was not delivered until after the crisis resulting in a considerable balance displacement.

“Therefore, we need to have more than one good year before the market is seriously lifted as there is a massive overhang of capacity and a massive imbalance. However, this is a step in the right direction and it is very comforting for the industry that it is moving in the right direction. We need to start all over again so therefore we are looking forward to the year 2013 being the year in which we are fully able to look forward and leave the crisis behind”, Peter Sand says.

Jan Bylov is also of the opinion that the shipping industry’s optimism is right if he and other analysts’ expectations prove to be true.

“It might mean, that if we are right, that the growth is stabilising and moving forward and the latest central banks initiatives will add additional pressure it would result in the world economy moving into a higher gear. This will result in more cargo being transported and of course there is a potential that the freight rates might be adjusted to a higher level”, says Jan Bylov.

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