Contrasting prospects for the economies of the US, Africa, Asia and Europe were provided for members of BIMCO in Paris this week by four distinguished economists. In a wide ranging debate on economic growth in these regions, featured as part of the organisation’s Annual General Meeting, insights were provided into the prospects for the shipping industry as its fortunes were affected by these developments.
The Chief Economist of BNP Paribas Philippe d’Arvisenet, who considered the United States, suggested that while economic recovery in the US “lacks momentum” it had actually begun four years ago. While there were still employment problems with uncertain employers reluctant to hire, and growing problems funding social security and healthcare, there were many positives to consider. The growing competitiveness of the US economy, with wages under control and productivity rising was a cause for optimism, with a significant advantage being the declining cost of energy, with the “revolution in energy extraction” from shale gas. There were, he suggested, short term hurdles to overcome, but long term opportunities.
Jean Louis Martin, Head of Emerging Markets at Credit Agricole Group, considered the march of Africa from a condition of despair at the turn of the century to real and present progress, with an average growth rate throughout the continent of 4.8%. While it was necessary to maintain a sense of perspective – the whole of Africa amounts to an economy roughly the size of Spain – and to be aware of the great variations in development throughout the continent, there were African “lions” to be found. There was still a considerable reliance in many African economies of energy exports, a number of countries were developing fast, with rising investment and the emergence of a growing middle class. Increased political stability was apparent in some countries, but in others political and social change was badly needed and little economic integration throughout the continent.
China remained “the big panda in the room” when considering Asia, suggested Mr. Olivier de Boyson of Societe Generale Group. While there was a perception that all large emerging markets have been slowing down, and China had been affected by the crisis in other parts of the world, he anticipated that there would be no hard landing for the largest Asian economy. With the China model built on investments and current plans based on domestic expansion, there were long term questions about urbanisation and the ageing population, but this was unlikely to impact upon the situation for the next 2-3 years.
Elsewhere in Asia, domestic demand was increasing, there were pressures from export competitiveness and permanent risks of asset bubbles. There was generally upward momentum, although India remained a special case, with lower growth and some markets in recession. Changes were taking place, with the opening of some Indian sectors to foreign investment.
The “funny place called Europe”, said Mr. Paul van den Noord, Counsellor of the OECD, was following a “multi-speed recovery path”, with generally weak growth and with most countries still below pre-crisis GDPs. While Europe has “a huge growth potential”, it remains in crisis mode. It suffered from too much product regulation which greatly hindered inter-state trade, something which compared very badly when compared to the US where there was twice as much cross-border trade. Similarly, labour mobility was poor and compared to the US, where immigrants tended to be well qualified, this was not the case in Europe. Structural reform, said Mr. van den Noord, was crucial to assist growth, build wealth, demand and employment, but it was hard to convince the political leadership of this need.
There followed a brisk debate on growth perspectives between three CEOs, Philippe Louis-Dreyfus, President of Louis Dreyfus Armateurs, Ron Widdows CEO of Rickmers Holdings and Niels Stolt-Nielsen, Director and CEO of Stolt-Nielsen Ltd.
Mr. Louis-Dreyfus suggested that short term perspectives dominate shipping in a fast changing world, with the “mental approach” of shipping people in a state of change and “not a good thing for a long-term business like shipping. Mr. Widdows sketched the disastrous situation in the liner trades with terrible box and charter rates and asset values effectively destroyed in a situation which was “not just a cycle” The huge loss of equity in the German KGs and the dislocation to banks was just part of a sector that faced huge structural changes.
A rather more optimistic view was provided from the chemical sector, with Mr. Stolt-Nielsen suggesting that despite the large amount of speculative building prior to 2008, demand, closely linked to global GDP was picking up. Nevertheless, new short term money was coming into the industry, attracted by “eco-ship” possibilities and speculation remained a fact of life in the industry.
Members attending the BIMCO AGM were given an exclusive presentation on the present and long term energy situation by Ambassador Richard H. Jones, Deputy Executive Director of the International Energy Agency in Paris, who gave a wide-ranging assessment of both the short term market trends and some of the agency’s long term scenarios.
Mr. Jones spoke of the fast changing situation, in which the North American “supply shock”, the lagging supply from countries affected by the “Arab Spring” instability, and the rise of non-OPEC suppliers were all redefining the supply chain and requiring new assessments of the energy world. He spoke of the growing significance of gas, the growing divergence between OECD and non-OECD and the significance of a scene where environmental policy was an important driver, where hitherto price had been the main criterion. There remained a need for OPEC oil – “an essential part of world markets” although both the shale gas impacts (where there were still questions about decline rates) and the rise of non-OPEC oil would have consequences.
Mr. Jones suggested that energy challenges today were more complex , developments were faster changing than ever before and the search for sustainability was now established.
Source: BIMCO
The Chief Economist of BNP Paribas Philippe d’Arvisenet, who considered the United States, suggested that while economic recovery in the US “lacks momentum” it had actually begun four years ago. While there were still employment problems with uncertain employers reluctant to hire, and growing problems funding social security and healthcare, there were many positives to consider. The growing competitiveness of the US economy, with wages under control and productivity rising was a cause for optimism, with a significant advantage being the declining cost of energy, with the “revolution in energy extraction” from shale gas. There were, he suggested, short term hurdles to overcome, but long term opportunities.
Jean Louis Martin, Head of Emerging Markets at Credit Agricole Group, considered the march of Africa from a condition of despair at the turn of the century to real and present progress, with an average growth rate throughout the continent of 4.8%. While it was necessary to maintain a sense of perspective – the whole of Africa amounts to an economy roughly the size of Spain – and to be aware of the great variations in development throughout the continent, there were African “lions” to be found. There was still a considerable reliance in many African economies of energy exports, a number of countries were developing fast, with rising investment and the emergence of a growing middle class. Increased political stability was apparent in some countries, but in others political and social change was badly needed and little economic integration throughout the continent.
China remained “the big panda in the room” when considering Asia, suggested Mr. Olivier de Boyson of Societe Generale Group. While there was a perception that all large emerging markets have been slowing down, and China had been affected by the crisis in other parts of the world, he anticipated that there would be no hard landing for the largest Asian economy. With the China model built on investments and current plans based on domestic expansion, there were long term questions about urbanisation and the ageing population, but this was unlikely to impact upon the situation for the next 2-3 years.
Elsewhere in Asia, domestic demand was increasing, there were pressures from export competitiveness and permanent risks of asset bubbles. There was generally upward momentum, although India remained a special case, with lower growth and some markets in recession. Changes were taking place, with the opening of some Indian sectors to foreign investment.
The “funny place called Europe”, said Mr. Paul van den Noord, Counsellor of the OECD, was following a “multi-speed recovery path”, with generally weak growth and with most countries still below pre-crisis GDPs. While Europe has “a huge growth potential”, it remains in crisis mode. It suffered from too much product regulation which greatly hindered inter-state trade, something which compared very badly when compared to the US where there was twice as much cross-border trade. Similarly, labour mobility was poor and compared to the US, where immigrants tended to be well qualified, this was not the case in Europe. Structural reform, said Mr. van den Noord, was crucial to assist growth, build wealth, demand and employment, but it was hard to convince the political leadership of this need.
There followed a brisk debate on growth perspectives between three CEOs, Philippe Louis-Dreyfus, President of Louis Dreyfus Armateurs, Ron Widdows CEO of Rickmers Holdings and Niels Stolt-Nielsen, Director and CEO of Stolt-Nielsen Ltd.
Mr. Louis-Dreyfus suggested that short term perspectives dominate shipping in a fast changing world, with the “mental approach” of shipping people in a state of change and “not a good thing for a long-term business like shipping. Mr. Widdows sketched the disastrous situation in the liner trades with terrible box and charter rates and asset values effectively destroyed in a situation which was “not just a cycle” The huge loss of equity in the German KGs and the dislocation to banks was just part of a sector that faced huge structural changes.
A rather more optimistic view was provided from the chemical sector, with Mr. Stolt-Nielsen suggesting that despite the large amount of speculative building prior to 2008, demand, closely linked to global GDP was picking up. Nevertheless, new short term money was coming into the industry, attracted by “eco-ship” possibilities and speculation remained a fact of life in the industry.
Members attending the BIMCO AGM were given an exclusive presentation on the present and long term energy situation by Ambassador Richard H. Jones, Deputy Executive Director of the International Energy Agency in Paris, who gave a wide-ranging assessment of both the short term market trends and some of the agency’s long term scenarios.
Mr. Jones spoke of the fast changing situation, in which the North American “supply shock”, the lagging supply from countries affected by the “Arab Spring” instability, and the rise of non-OPEC suppliers were all redefining the supply chain and requiring new assessments of the energy world. He spoke of the growing significance of gas, the growing divergence between OECD and non-OECD and the significance of a scene where environmental policy was an important driver, where hitherto price had been the main criterion. There remained a need for OPEC oil – “an essential part of world markets” although both the shale gas impacts (where there were still questions about decline rates) and the rise of non-OPEC oil would have consequences.
Mr. Jones suggested that energy challenges today were more complex , developments were faster changing than ever before and the search for sustainability was now established.
Source: BIMCO
