2016: What does the new year hold in its hands?

5 January 2016
News

The year ahead is framed with uncertainty but there are opportunities ahead for the well-positioned player. Our Head of Market Intelligence, Teresa Lehovd, has identified 10 trends that we can expect to see in 2016.

 

    
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1. The world economy expands by 2,9%

The United States is predicted to remain solid, China to grow at a slower pace and the Eurozone to perform a slight growth.

 
 
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2. Commodity prices remain low

Excess global supplies of coal, iron ore, crude oil and other commodities, keeps commodity prices down and slows growth in emerging markets such as: Latin America, Africa, and parts of Asia.

 

 
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3. Middle East’s economic growth remains restrained

Drop in oil prices, regional political instability, and war with the Islamic State all restrain growth in the Middle East.

 

 
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4. Interest rates increase and the US Dollar strengthens

The US Federal Reserve increased their interest rate for the first time in a decade in December 2015 and flags for more raises over the next years. Other mature countries will follow.

 

 
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5. Factory new light vehicle demand expands by 2,8%

Mature markets (US and Western Europe) will remain in growth or recovery mode.
China’s automotive demand will improve while other large emerging markets will likely face a mixed performance. Brazil and Russia will be in deep contraction. India will see accelerating growth, ASEAN  will return to modest growth and Africa’s growth will remain flat.

 

 
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6. High and Heavy markets experience constrained growth

This is a result of low commodity prices and decelerating global construction spending. High debt levels combined with increasing interest rates (reference 4.) in many countries negatively affect public projects.

 

 
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7. Breakbulk markets decelerate but opportunities remain

Renewable energy and energy efficiency projects, urban mobility projects and projects related to the industrialisation of emerging markets will continue.

 

 
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8. World trade volumes continues to grow at subpar

In the past, world trade grew twice as fast as the global economy. This relationship is now one-to-one, affecting the volumes of cargo being transported between continents. For 2016, there is a risk of a contracting global trade environment.

 

 
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9. Global vessel overcapacity

Many shipping sectors will face the need for increased recycling. The PCTC industry is however in a better position than many other sectors. With appropriate re-arrangement of smaller tonnage from deep-sea to short-sea and recycling of old and less efficient vessels, the industry will give way to the new, larger and smarter vessels without much implication to total deep-sea capacity.

 

 
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10. The risks surrounding the global economy increases

This is driven by China’s rising debt and excess capacity, conflicts in the Middle East and Africa, the high Eurozone debt burden and a corporate risk aversion in developed countries.