Global economic conditions have shifted in a decisive manner: the U.S. dollar is increasing in value, commodity prices are collapsing, China's and South America's economies are slowing, and Europe's economic experimentation is starting to pay off. These trends are disrupting international trade patterns and increasing volatility in demand for containerized transportation.
Developed economies, sustained by low interest rates and quantitative easing, are working now to resolve structural issues. As a result, U.S. gross domestic product (GDP) growth rebounded by 2.3 percent in Q2 as personal consumption and government spending reflected the higher level of confidence in the economy. However, the stronger U.S. dollar and trade partners' lower economic growth meant that total U.S. trade and exports decreased. Europe's growth was not spectacular, but its quantitative easing program was working, thanks in part to low oil prices and austerity reforms. Japan's "Abenomics" reforms helped that economy to post strong Q1 GDP growth of 2.4 percent, and economists are issuing similar estimates for Q2.
Export-dependent economies, however, are struggling. The Chinese government has been using rate cuts and debt restructurings to help it meet a 7.0 percent GDP growth target. Brazil's economy is teetering as the country copes with austerity and monetary tightening. One bright spot: India, which grew 7.5 percent in the first quarter on top of an impressive 6.5 percent annualized growth rate in Q4/2014. If India can survive export weakness in its trading partners and political opposition to reforms, it might sustain this economic rebound after a decade of underperformance.
Global container throughput should grow by roughly 1.3 percent in Q2 after dipping by 2.7 percent in Q1 (see Figure 1). Expect total trade to fall by about 2.1 percent in Q2, an improvement over the 8.0 percent decline in Q1. Volatile container growth will persist as companies and trade patterns adjust to macroeconomic changes.