BERLIN — IATA’s senior economist George Anjaparidze provided a sobering, but still hopeful, outlook for global air cargo markets in his Plenary Session presentation “When Will Growth Return?” at the 2016 World Cargo Symposium Tuesday. The answer to the question in the speech’s title might be “eventually, but not as much as you’d hoped.”
Pulling air cargo industry information from IATA’s latest Cargo Chartbook, he said the industry continues to see growth – “slower that anticipated and lower than its potential,” but still growth. He also warned that “the world was on the verge of a ‘new mediocre’ … becoming the ‘new reality.’”
Emerging economies, Anjaparidze said, “are growing below their potential and China’s growth is also slowing,” while other regions, such as Brazil, are into negative economic growth or in full recession.
“But that’s not even the bad news,” he said. The International Monetary Fund is revising its forecast downward in April, “same as they have done for the last four years.”
Anjaparidze, however, said that not all was doom and gloom. If you looked in the right places, such as the Eurozone, some growth “actually came back last year and will continue this year.” The best part, he said, is that Europe is “not just a large economy, it’s an open economy; it’s also open for other countries that trade with Europe,” which give it more global influence.
U.S. volumes slowed somewhat last year, he said, but upon closer inspection, the slowdown there was driven mostly by a cutback in the energy sector and some weather events. “But unemployment is down to levels before the global economic crisis,” he added.
The China slowdown is more worrisome, Anjaparidze said, given the impact it has already had across the world. “But an economy moving away from investment-driven growth to a consumer-driven growth is generally a good thing. It’s just the pace at which this happened has created shock across world commodities.”
Energy prices were driven down by supply-side factors, he continued. Prices have come down, which should be a major stimulus to the economy. “But we have not seen that materialize,” he said, adding that “those benefits to lower prices may still be on the horizon.”
Overall, world trade growth has been very weak – only 0.6 percent higher — but FTKs have continued their growth momentum, which he said was good news. Air cargo was not hit as adversely, and consumer confidence seems to be on the rise.
“Last month’s figures show contraction of export orders, which may mean we’ll see some short-term headwinds,” Anjaparidze said. “Fuel prices have fallen significantly, which may have some short-term benefits – but that’s often a double-edged sword. It makes it cheaper to use old aircraft, and there is all this capacity on the sidelines.”
To sum up, he said, there is positive economic momentum, but in the short-term we have export weaknesses. “Consumer confidence is so far the best sign of optimism,” he said.
Air Cargo World is the Official Media Sponsor of the IATA World Cargo Symposium.