Glass Sees Outlook as Half-full

S&P Global Ratings’ Senior Economist Opens Breakbulk Europe

By Carly Fields
BREAKBULK EUROPE COVERAGE – S&P Global Ratings’ Senior Economist Boris Glass opened Breakbulk Europe 2019’s conference program with an upbeat assertion that economic expansion “doesn’t just die of old age.”
Dismissing naysayers that claim an economic expansion has a limited shelf life, Glass said he did not see evidence of the usual triggers for a global recession.
“We don’t see oil prices getting to a threshold that will be critical for global growth and from a macro perspective, IMO 2020 will not have a significant effect,” Glass said of the International Maritime Organization’s pending Jan. 1, 2020 deadline for high-sulfur fuel for vessels. Additionally, “the share price decline of last year was ‘just’ a scare and broadly they have recovered.”
However, he did concede that there was one risk that might upset his stable outlook. “The U.S. credit cycle could turn, which would be an abrupt change in access to credit for businesses.” This presents a significant risk to growth, he said.
Overall, S&P Global Rating believes that global growth going forward will be slower, but a little bit healthier. Slower because Europe had a bad starting point last year, any boost from the U.S. stimulus is subsiding, the global growth cycle has matured in the U.S. and Chinese growth is expected to stabilize at a lower level. On the “healthier” side, Glass saw gradual deleveraging of China, domestic demand driving growth in key economies, strong labor markets in Europe, and central banks keeping rates low for longer.
S&P Global Ratings forecasts GDP growth at 3.4 percent for 2019 and 3.6 percent for 2020, describing this as a “moderate recovery.”
However, Glass added: “Global trade doesn’t look too good generally and developing markets are not doing so well in manufacturing, which impacts imports and exports.”
He expected trade to pick up in the second half of this year, as the European car industry gets back up to speed and manufacturing recovers. However U.S. President Donald Trump’s new additional 15 percent tariffs against China “will limit this recovery.”

Photo: S&P Global Ratings’ Senior Economist Boris Glass speaks at Breakbulk Europe.