Slow recovery will keep freight rates under pressure - economist

Shipping and airfreight rates are set to remain under pressure for the first half of the year as the world economy is buffeted by political headwinds, according to Robin Bew, chief economist at The Economist Intelligence Unit. The Unit is expecting that world gross domestic product at purchasing power parity exchange rates will grow by 3.3% in 2013. This is down by 0.1 percentage points from the Economist’s earlier forecast of 3.4%, and “reflects our view that the recovery from the slowdown in 2012 will take a bit longer than expected to get going”. However, Bew and his team are more optimistic about prospects for the second half of the year – and for the sub-Saharan region in particular. Sub-Saharan Africa will see growth pick up slightly to 4.4% in 2013 and to almost 5% next year. Several of the oilexporting countries in the region (including Angola, Cameroon, Chad, Equatorial Guinea and Ghana) will benefit from rising hydrocarbons output. New mining production in several countries will also be a positive factor for growth, he predicts. In contrast, economic growth in the Middle East and North Africa “will weaken slightly” to 3.3% in 2013. “Yet this headline figure masks a considerable divergence between positive prospects for oil-producing countries (except for Iran) and mostly negative prospects for non-oilproducing states. “A number of major nonoil exporters, notably Egypt, are still suffering from the political and economic fall-out of the Arab Spring. Regional growth will strengthen next year, in keeping with the global trend.” On a global scale, “the most promising major economy is perhaps the US.” Consumer spending and business investment grew “strongly” in the last quarter of 2012, and this trend seems to be continuing. Europe will stabilise, but will struggle to grow. “Unemployment remains very high, with youth unemployment above 50% in some regions of southern Europe.” Japan’s immediate growth outlook is positive, even though base effects that contributed to strong growth of nearly 2% last year mean that the economy will grow at only about half that rate in 2013. Chinese growth is expected to reach 8.4% on the back of improved US and Chinese economies and a stable Europe. CAPTION Freight rates under pressure ... but greater optimism for second half of the year.