SHIPPING MARKET OUTLOOK 1.2 World Economy Sea Trade in 2015 (see table opposite).So overall,the "bounce back"in the OECD economies should Six months ago,we thought that the industrial be helpful in 2014. business cycle was bottoming out and things might be better over the coming year.Broadly In the non-OECD countries,the Chinese speaking,this turned out to be the case.In economy has slowed somewhat,but continues spring 2013,world industrial production briefly as the lead driving force in the marine market. moved into negative growth,driven by the euro Industrial production has fallen from 13.7% area crisis and weak growth in the other OECD growth in 2011 to 8.6%growth in the year to icensed to Shanghal #10216031 economies.But momentum picked up over the February 2014.Since the new leadership came summer,and by January 2014 OECD industrial into office last year,changes are taking place, production was growing at 3.8%pa.Currently including a determination to clamp down on the global economic forecasts are positive,with corruption and a changing focus of economic industrial output expected to grow by 4%in activity.China is no longer the super cheap 2014 and world GDP by 3.7%(see table 1.1 manufacturer to the world that it was 10 years Maritime Uriversity opposite).So from this perspective,after a ago.But it has large and growing consumer difficult year in 2013,the shipping industry markets.Iron ore imports continue their moves into 2014 with the prospect of better upward trajectory,and over the last two years support from the world economy.But the risks this has been reinforced by rapidly growing remain.The north Atlantic banking crisis has imports of coal and nonferrous metal ores.This Dis tribution is still not been resolved and there is the diversification is welcome for the bulk shipping potentially destabilising effect of recent industry.The main worry is the underlying developments in the Black Sea. health of the property market,the most likely source of future problems. From the OECD perspective,the good news is plea that the euro area economies are now "back in Meanwhile,the other Asian countries have not the black".In the fourth quarter of 2013,the fared so well.The industrial production of euro zone finally registered positive growth of Asia,excluding China and Japan,slumped from 0.5%,leaving GDP at year end in roughly the 6%growth in January 2013 to a 1.2%decline in remember to same place it started,but on an upward trend. January 2014.In January 2014,India's The current forecast is for sluggish GDP growth industrial production was only 0.1%higher than of 1.3%in 2014 and 1.6%in 2015.Since the a year earlier and in several other Asian euro area remains one of the largest maritime economies production was down.But the trading regions,this modest growth is at least general prospect is for a turnaround in 2014. an improvement. On balance,the economic outlook for 2014 and the sourde. The economic turnaround in the United States 2015 seems reasonably positive.The GDP is also gathering pace,helped by the housing projections in table 1.1 opposite show global market and the energy markets,which have growth gathering pace over the next two years, transformed the USA's energy balance from driven by a turnaround in the north Atlantic http://ww. decline to seemingly abundant supplies of and,hopefully,stronger growth in Asian relatively cheap natural gas and oil.The economies.Translating that into seaborne trade, business cycle bottomed out at 1.9%GDP the forecast is"steady as she goes".Projections growth in 2013,and GDP is predicted to grow in the table opposite show dry bulk trade at2.8%in2014and3.0%in2015 growing at 4.3%in 2014;the oil trade at 2.1%; and the container trade at 6.0%.That would Japan and South Korea,two other major OECD provide a solid platform for bringing the economies,picked up strongly in 2013. maritime economy closer to balance.But the Currently the forecasts for Japan over the next risks in China and the Black Sea remain.Also it two years are more muted,with 1.7%growth is six years since the last crisis,so care is .2218303:54:80410299051ci projected for 2014 and slightly less in 2015. needed to protect investments from one of those But the projections for South Korea are much economic shocks which have a habit of popping more robust,showing 3.7%in 2014 and 4.0% up every seven or eight years. Clarkson Research Services 10 Spring 2014Clarkson Research Services 10 Spring 2014 SHIPPING MARKET OUTLOOK Six months ago, we thought that the industrial business cycle was bottoming out and things might be better over the coming year. Broadly speaking, this turned out to be the case. In spring 2013, world industrial production briefly moved into negative growth, driven by the euro area crisis and weak growth in the other OECD economies. But momentum picked up over the summer, and by January 2014 OECD industrial production was growing at 3.8% pa. Currently the global economic forecasts are positive, with industrial output expected to grow by 4% in 2014 and world GDP by 3.7% (see table 1.1 opposite). So from this perspective, after a difficult year in 2013, the shipping industry moves into 2014 with the prospect of better support from the world economy. But the risks remain. The north Atlantic banking crisis has still not been resolved and there is the potentially destabilising effect of recent developments in the Black Sea. From the OECD perspective, the good news is that the euro area economies are now “back in the black”. In the fourth quarter of 2013, the euro zone finally registered positive growth of 0.5%, leaving GDP at year end in roughly the same place it started, but on an upward trend. The current forecast is for sluggish GDP growth of 1.3% in 2014 and 1.6% in 2015. Since the euro area remains one of the largest maritime trading regions, this modest growth is at least an improvement. The economic turnaround in the United States is also gathering pace, helped by the housing market and the energy markets, which have transformed the USA’s energy balance from decline to seemingly abundant supplies of relatively cheap natural gas and oil. The business cycle bottomed out at 1.9% GDP growth in 2013, and GDP is predicted to grow at 2.8% in 2014 and 3.0% in 2015. Japan and South Korea, two other major OECD economies, picked up strongly in 2013. Currently the forecasts for Japan over the next two years are more muted, with 1.7% growth projected for 2014 and slightly less in 2015. But the projections for South Korea are much more robust, showing 3.7% in 2014 and 4.0% in 2015 (see table opposite). So overall, the “bounce back” in the OECD economies should be helpful in 2014. In the non-OECD countries, the Chinese economy has slowed somewhat, but continues as the lead driving force in the marine market. Industrial production has fallen from 13.7% growth in 2011 to 8.6% growth in the year to February 2014. Since the new leadership came into office last year, changes are taking place, including a determination to clamp down on corruption and a changing focus of economic activity. China is no longer the super cheap manufacturer to the world that it was 10 years ago. But it has large and growing consumer markets. Iron ore imports continue their upward trajectory, and over the last two years this has been reinforced by rapidly growing imports of coal and nonferrous metal ores. This diversification is welcome for the bulk shipping industry. The main worry is the underlying health of the property market, the most likely source of future problems. Meanwhile, the other Asian countries have not fared so well. The industrial production of Asia, excluding China and Japan, slumped from 6% growth in January 2013 to a 1.2% decline in January 2014. In January 2014, India’s industrial production was only 0.1% higher than a year earlier and in several other Asian economies production was down. But the general prospect is for a turnaround in 2014. On balance, the economic outlook for 2014 and 2015 seems reasonably positive. The GDP projections in table 1.1 opposite show global growth gathering pace over the next two years, driven by a turnaround in the north Atlantic and, hopefully, stronger growth in Asian economies. Translating that into seaborne trade, the forecast is “steady as she goes”. Projections in the table opposite show dry bulk trade growing at 4.3% in 2014; the oil trade at 2.1%; and the container trade at 6.0%. That would provide a solid platform for bringing the maritime economy closer to balance. But the risks in China and the Black Sea remain. Also it is six years since the last crisis, so care is needed to protect investments from one of those economic shocks which have a habit of popping up every seven or eight years. 1.2 World Economy & Sea Trade Licensed to Shanghai Maritime University. Distribution is restricted; please remember to acknowledge the source. http://www.clarksons.net 15/09/2014 08:45:39 36122 Licensed to Shanghai Maritime University. Distribution is restricted; please remember to acknowledge the source. http://www.clarksons.net 15/09/2014 08:45:39 36122