Air cargo in the ‘new mediocre’ of global economic growth

The outlook for the air cargo sector is mixed, with a new reality in the global economy and short term worrying trends including the entrance of new belly capacity, aircraft coming out of storage due to low oil prices and worrying indications from the Purchasing Managers’ Index (PMI) up against a medium-term view of buoyant consumer confidence, according to IATA economists.

Cargo Market global economy IATA

The global economy is growing, but growing at a lower rate than anticipated, said George Anjaparidze, senior economist, IATA who went on to cite International Monetary Fund (IMF) CEO
Christine Lagarde who recently warned that the world was on the threat of entering a new phase of mediocre growth becoming the new reality. “And that’s exactly what we’re seeing,” added Anjaparidze.

The advanced economies are still growing, but very slowly he noted with emerging economies growing far below their potential and major economies like China, decelerating. “That is having an adverse impact on commodity exporters,” he said. For Latin Amercia this has translated to negative growth, or recession techically, largely driven by the Brazilian economy which is in strong contraction and expected to contract by as much as three per cent this year.

The bad news is that the IMF is expected to revise its global growth forecast downwards in April, and that’s really what we’ve seen in and out over last four years,  Anjaparidze said.

Noting the difficulties in predicting what will generate economic growth going forward, he noted that “the conventional wisdom of how stimulus packages would have benefitted the global economy are not really materialising, so we are in difficult times.”