Positive Trade Outlook Supports Projects

Positive Trade Outlook Supports Projects

By Carly Fields

BREAKBULK EUROPE COVERAGE – Supportive global monetary and fiscal policies are shoring up world growth – good news for trade and the supply chain industry that supports it, according to Caterpillar’s chief economist.

Delivering the keynote speech at this year’s Breakbulk Europe, Nicolas Clerc saw only partial roadblocks from ongoing trade negotiations, stating that the manufacturer’s expectation is for trade volume growth to be faster than overall economic growth.

“This has been the norm in the past, but we saw exceptions in 2012 and 2016,” Clerc said. “Now, we are back in a growing world that is going to drive a lot more volume through transportation and logistics channels, and challenge all of us sitting in those chains to deliver those goods in an efficient, cost effective and sustainable manner,” he said.

Long and Slow Recovery

Clerc pointed to the long and slow recovery from the Great Recession, noting that the world has adapted to shocks, both cyclical and structural, since 2016. He described 2017 as a “pivotal year” when confidence started to return to the market. Gross domestic product growth is now buoyant for the world and is coming from all regions.

“It’s been eight years since we emerged from recession, but we are only now getting into the expansion phase,” he said. With the expansion phase comes many years of growth, although investment will be needed to support that phase. “Now is the opportunity to expand capacity, invest in innovation and in productivity. We will reap the benefits through the rest of the cycle and the next cycle,” Clerc said.

The more investment ploughed into productivity and enhancing processes, people and technology, the less constraints project cargo movers will feel during the business cycle. Those constraints drive prices up leading to inflation that scare central banks prompting them to raise interest rates, he said. “That generally hits business confidence and we will then go through a recalibration. So, productivity is key to make those cycles as long and as beneficial for the entire world economy as possible.”