Analysis by BIMCO
After lower than expected growth in the first half of 2014, the International Monetary Fund (IMF) has once more lowered its forecast for 2014. The IMF expects world growth to come in at 3.3%; down 0.1 points from its previous estimate in July. According to BIMCO analysis The downgrade happened despite improving US growth figures, as these were not able to offset the weakened development in the Eurozone and a number of key emerging markets. The news breaks less than three months after the last IMF update that lowered the 2014 growth projection from 3.7% to 3.4%.
The IMF has also lowered its growth estimation for 2015 from 4.0% in July to 3.8% now. This is in part due to the level of global investments, which have been low for some time now, putting a damper on higher growth in the near future. The IMF also warns of increased downside risks, in the main that the financial markets have been overly optimistic about the future and the fact that tensions are still brewing in the Middle East and between Russia and Ukraine.
The IMF also points out that with the current developments and with future risks in mind, stronger growth might take place but could also fall below expectations once again. The economic recovery is becoming more country-specific, driving the need for more country-specific reforms. The battle is against high debt and unemployment leftover from the crisis, as well as a low growth in future.
BIMCO has expressed the hope of avoiding a photo finish at the end of the year to make the call whether 2014 would actually turn out to be better than 2013 in GDP terms. Now we know better.
Twenty-two months after projecting World GDP to reach 4.1% in 2014, the IMF now aims to hit bull’s-eye with its recent 3.3%. Who is to blame then? No one can hide here. The advanced economies are down from 2.2% to 1.8% and the emerging and developing economies are down from 5.9% to 4.4%.
The only positive thing to take away from this seems to be the lower oil prices arising from weaker demand and higher domestic production in the US. Lower prices are good news for the stalling economies of the world seeking lower input costs to their economies.
According to Marine Bunker Exchange (MABUX), oil prices have been in a steadily declining trend since late June. This is also good news for the shipping industry, which is now experiencing the lowest bunker prices for 3 years.
Source: BIMCO