Potential Risks, Costs and Returns of the Global Economy in 2017 (and Beyond), the Likely Impact upon Global Shipping Industry and Methods to Take Advantage of Opportunities Whilst Minimising Threats

Indian Navy

The Global Economy has been in the doldrums in the last decade and has not completely recovered from the financial crisis of 2008. The crisis that began with the sub-prime market in the US, has now been conveniently exported from the US, leaving the world’s largest economy in a ‘mirage of growth’ while quantitative easing is preparing the grounds for the worlds next financial crisis. This situation is further exasperated by the forecast of dipping growth rates of global economies for the coming years. In this turbulent environment, it is only natural that the backbone on which 90% of the world trade moves, the shipping industry, would not remain insulated. Unique problems of oversupply, excessive container capacity and inability to achieve ‘zero supply side growth’ (BIMCO, 2016) among others, has only added to the already complicated quagmire. This report attempts to analyse the potential risks, costs and returns of the Global Economy in 2017 (and beyond), and the likely impact upon Global Shipping Industry and identify way ahead to take advantage of opportunities whilst minimising threats. It is practically impossible to examine all aspects of the Global Economy in the scope of this article. However, the issues that may have the largest impact have been highlighted.

Reduction in trade globally, investment shrinking and increased uncertainties in the policies of countries, has slowed down the Global Economy. Predicted 2016 global growth has fallen 0.1 point from the Jun 16 estimates to 2.3 % (WorldBank, 2017). In 2017, it is expected that growth will rise to 2.7 % global growth is expected to rise to 2.7 percent in 2017, riding on the expected recovery in emerging market and developing economies (EMDEs).

Overall, the better economies are still struggling with reduced growth, uncertainty on policy issues and poor investments. US, despite the euphoric economic feel good post Trump’s victory, is likely to a modest growth of 2.2 percent in FY 2017-18. It is expected that encouraging monetary policies will see the Euro Area and Japan improve on growth forecasts in the coming year.

From 3.4 % in 2016, EMDE is expected to make significant contribution to global growth in the coming years, with predictions of 4.2 percent in 2017 and 4.7 percent in 2018-19. China’s growth rate remains conservative and is expected to stabilise at 6.5% (Kose, 2017).