A three speed world

The strongest of the three centres of economic development is North America but growth is slow and hesitant and faces roadblocks along its way. Consumers remain skeptical that their jobs and savings are safe and they are refraining from returning to spending patterns seen before 2009. 2013 is another lost year with the expectations of a more positive outlook now projected for 2014.

The Asian economies are the strongest, but they must depend on themselves and not on the US or Europe for exports. They are now experiencing a growing level on imports and GDP growth remains comparatively weak, with China managing less than 7.5% growth. Virtually all of the countries fiscal policies are supporting growth through expenditure and trying to avoid rising unemployment.

Japan, which after two decades of stagnation, has changed course with its new government. Monetary expansion has been introduced and the government is supporting investments and spending. Included in this package of support is a deliberate policy to let the Yen devalue. In January 2012 it was near 78 to the US dollar, today the dollar buys over 100 Yen, a drop of over 30%. And it is working with exports rising and business expanding along with the GDP, all without an increase in inflation.

The Eurozone is the weak link in the chain. Through self-inflicted fiscal strategies and adherence to currency ideals without strong foundations, it went from recovery in 2010 to decline in 2012 and most likely throughout 2013.

Virtually every institution – the IMF, the OECD, the World Bank and the Brussels Commission – is ratcheting down growth projections for this year. How does one cure unemployment over 12% for the group and over 25% for southern members? How does one deal with a lost generation of youth facing over 50% unemployment?

One consequence is that demand for shipping will remain weak globally as demand falters and stalls for both liner and bulk commodities.