Maersk CEO: The global economy is much worse than predicted

2015-11-10 09:00

Affected by the economic slowdown in emerging markets, the IMF lowered its global economic growth forecasts for this year and next.

However, regarding the global economy, Maersk CEO Nils Smedegaard Andersen is even more pessimistic than the IMF, believing that global economic growth is slower than predicted by the IMF and other major forecasting institutions.

As the world's largest shipping company, Maersk is a leader in global trade, controlling 15% of consumer goods' ocean transportation.

Nils Smedegaard Andersen stated in an interview with Bloomberg that "We believe global economic growth is slowing down, and current trade is significantly weaker than the forecasts we are seeing."

On November 6, due to weak commodity prices leading to an economic slowdown in emerging markets, the IMF lowered its 2015 global GDP forecast from 3.3% to 3.1%. At the same time, the IMF also lowered its 2016 economic growth forecast from 3.8% to 3.6%.

However, Maersk CEO Andersen said that despite the lowered forecast, the IMF might still be too optimistic.

He stated: "We have made a series of macroeconomic forecasts, but compared to other forecasting institutions, we anticipate lower global economic growth in 2015 and 2016, especially in developing countries or in Europe. We are more pessimistic than most forecasters."

According to data released last Friday, Maersk's container shipping profit fell by 61% in the third quarter, with global shipping demand showing little growth compared to the same period last year. The shipping industry is already oversupplied, and the slowdown has made matters worse for the industry.

Andersen believes that the depreciation of the euro has made Chinese exporters less competitive, leading to the most severe decline in trade from Asia to Europe.

However, he believes there are no signs yet that the global economy will experience a depression like the 2008 financial crisis.

We are seeing some distorted reallocations happening between commodity exporting and commodity importing countries, but this should not lead to a full-blown crisis, and there is no evidence of that happening under the current circumstances.

Wallstreetcn.com mentioned last week that due to slowing demand, it will reduce network capacity, postpone investments, and cut 4,000 global jobs by 2017, which is about 1/6 of its land-based workforce.

As early as September this year, Wallstreetcn.com cited Business Insider reporting that the drop in shipping costs was due to an increase in container ship supply and a decrease in global manufacturing cargo demand. The international trade situation is not indicating global economic prosperity. The current situation is not getting better, but worse.

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Global shipping operating costs will rise over the next two years

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