Global economic growth may dip further in 2019

Business graph with [FILES] arrows tending downwards. Photo: FINANCEMONTHLY

 By Sulaimon Salau
Global economic growth dipped in 2018 and is expected to decline further in 2019, going by the
latest report by the United Nations Conference on Trade and Development (UNCTAD).

The report on the review of the Maritime Transport 2019, obtained by The Guardian yesterday, said global growth slowed down abruptly during the fourth quarter of 2018, reflecting in part recessions in some emerging economies, and weakness in industrial sectors across many regions, and 2019 figures may also follow the trend.
 
“After reaching 3.1 per cent in 2017, growth in world gross domestic product (GDP) remained steady but edged down to 3.0 per cent in 2018, below the historical average recorded between 1994 and 2008.”
  
UNCTAD linked the downside risks to slowdown in maritime trade growth, as trade tensions and protectionism topped the list, followed by Britain and Northern Ireland’s decision to leave the European Union (“Brexit”); the economic transition in China; geopolitical turmoil; and supply-side disruptions, such as those occurring in the oil sector.
 
In shipping throughput, UNCTAD said activity was limited by negative developments in the three largest economies of sub-Saharan Africa, including South Africa, Nigeria, and Angola.

The report added that global industrial production, a leading indicator of demand for maritime transport services decelerated to 3.1 per cent down from 3.6 per cent in 2017.
 
“In addition to country and sector-specific factors, high policy uncertainty arising from trade tensions between China and the United States generated strong downward pressure on global growth.
 
“In developing economies, GDP growth slowed to an estimated 4.2 per cent in 2018, while growth in the least developed countries fell short of meeting the targets set under the Sustainable Development Goals.
“In the developed countries, except for the United States, GDP growth decelerated from 2.3 per cent in 2017 to 2.2 per cent in 2018. Elsewhere, in countries with economies in transition, GDP growth improved from 2.1 per cent in 2017 to 2.8 per cent in 2018.
 
“Industrial production figures and surveys of purchasing managers suggest that the slower momentum is likely to continue in 2019. UNCTAD projects global GDP growth to further decline in 2019,” the report stated.
 
According to UNCTAD, maritime transport remains the backbone of globalised trade and the manufacturing supply chain, as more than four fifths of world merchandises trade by volume are carried by sea.

It stated that growth in international maritime trade fell slightly in 2018, owing to softer economic indicators amid heightened uncertainty and the build-up of wide-ranging downside risks. “This decline reflects developments in the world economy and trade activity,” it noted.
The report further noted that world maritime trade lost momentum in 2018, with volumes expanding at 2.7 per cent, below the historical averages of 3.0 per cent and 4.1 per cent recorded in 2017, but total volumes are estimated to have reached 11 billion tonnes, an all-time high.

“UNCTAD is projecting 2.6 per cent growth in 2019, and an annual average growth rate of 3.4 per cent for the period 2019-2024. However, the outlook remains challenging, given the heightened uncertainty regarding trade policy and wide-ranging downside risks clouding the horizon,” it stated.