Demand for dry bulk commodities from emerging economies could be set for a rebound. In its latest weekly report, shipbroker Allied Shipbroking noted that “during the past weeks, we have seen many organizations and think tanks show a more optimistic face with regards to the world economy. The World Bank, IMF and OECD have all made upward revisions to their world GDP forecast figures for 2017, while also showing better figures for 2018 as well. The consensus is that the outlook for global economy has been getting better during the first half of 2017, though most don’t hesitate to point out that it is still not good enough”, the shipbroker noted.
According to Mr. George Lazaridis, Head of Market Research & Asset Valuations with Allied Shipbroking, “the big improvement has been with regards to the perceived prospects of emerging markets, which are in their majority expected to reboot their growth momentum and show better figures than what we were seeing a year back. One of the most promising of these is China, with the IMF increasing its GDP growth estimate from 6.6% to 6.7% for 2017. India has also been one of the main, highly promising markets, these past years and from what it seems, its high prospects are not set to let anyone down anytime soon. Projected growth figures for 2017 for India are now set to reach 7.3%, while expectations are for this to propel up to 7.7% in 2018, maintaining as such its position as one of the world’s fastest growing economies”.
Lazaridis added that “at the same time, it is important to note that although many of the more developed economies have been also seeing upward revised figures regarding their economic growth for this year, they are still at relatively low levels and still plagued with a considerable amount of instability. Even though it is emerging countries that primarily drive the raw commodities trade, without the boost of large consumption of end products from the wealthier consumers in more developed economies, the trade chain remains incomplete. You need developed countries to take up the role as a multiplier on global trade, turbo boosting demand as well as economic growth in export oriented economies as well as major commodity exporters. Countries such as China have been covering the gap left behind by the U.S. and Europe over the past couple of years, however without these major economies stepping up to the plate it will be difficult to see global economic growth figures reach double digits any time soon”, he concluded.
It is good to have some optimistic news. Let us hope the forecasts are correct.