Global economy at a turning point?
In the first weeks of the New Year a chilly wind has been blowing over the financial markets. Many economists fear a sharp slowdown in the growth of the Chinese economy, with many consequences for the rest of the world. But the problem is not only China, in other countries the economic news doesn’t sound that good either. Although the economy in the United States is doing a little better, the underlying fundamentals are much less strong than generally expected. In addition there is a good chance that a recession in China also will hurt the American economy. A number of indicators suggest that the situation could be a lot worse than we think.
Where are the ships at sea?
A curious phenomenon is that the shipping sector is experiencing substantial problems. In the first week of January there were little to no cargo ships visible in the North Atlantic. That means that hardly any transport overseas has taken place. Thousands of ships were either anchored off the coast or anchored in the ports, this because of a lack of orders for transport. Some economists are even talking about a catastrophe for world trade. The Baltic Dry Index, the leading indicator for the evolution of prices for the transport of dry bulk products overseas, stands at a historic low point. In simple terms, this means it has never been cheaper to transport goods overseas. And that’s not exactly a hopeful signal.
Not good news for the automotive industry
The signals that are pointing in the direction of an economic slump are growing in number. Not only does the shipping sector have major problems, but the volume of transport by rail in the United States is at its lowest point for the past 6 years. This means that road transport is probably also slowing down, maybe even at a very fast rate. Some economists think the world economy is reaching a major turning point, with a future that looks rather gloomy. The results of the big companies may come under pressure and that is a situation that fleet managers have to take in account. A well-reputed bank – Royal Bank of Scotland – speaks of a deflationary crisis on the way. If that prediction is right, we could be facing tough economic times in the months to come. So it seems wise to delay new investments in the car park for some time. | 19/01/2016 | Jos Sterk