In all likelihood, the most fundamental factor that will affect current projections for worldwide economic growth is demographics, Jock O’Connell, an economist with Beacon Economics, told attendees at the AAPA annual conference in Long Beach, Calif.
The current global economic outlook looks good, but challenges expected to crop up in the future include U.S. trade policy, demographics and climate change, a noted economist said this week at the American Association of Port Authorities (AAPA) annual convention, taking place Oct. 1-4 in Long Beach, Calif.
The World Bank is predicting global economic growth of 2.7 percent this year, increasing to 2.9 percent in 2018. The International Monetary Fund (IMF) says that world economic growth of 3.5 percent is expected in 2017, up from 3.2 percent last year. Growth of 3.6 percent is projected for 2018, according to the IMF.
And Jock O’Connell, an international trade economist and advisor with Beacon Economics, said that in all likelihood, the most fundamental thing that will affect those projections is demographics.
“Populations will determine where the markets are going to be, who’s buying, and what the trade routes are going to be,” O’Connell explained during a presentation on global economic trends. “And we know some very solid statistics on what countries are gonna grow, what countries that are not gonna grow.”
Countries expected to shrink in population over the coming decades, he said, are China, Germany, Japan and Russia.
“By the end of this century, it’s expected there’ll be 300 million fewer Chinese than there are today, and a much smaller working age population. It’s already underway,” O’Connell remarked. “And we’ll begin to see this reflected in major trade between China and the rest of the world.”
Also, he said, India is likely to become the most populous country in the world by the end of the century.
“Most of the real population growth is going to come in sub-Saharan Africa, which is probably going to be of great relevance of anybody who runs a seaport along the Eastern seaboard or in North or South America,” he said.
Nigeria, in particular, is expected to be among the fastest-growing nations in the world between now and 2050, according to O’Connell’s data.
Regarding US trade policy, O’Connell called it a “disruptive factor” due to changes in American political winds over the past several months.
“There was a consensus (for over 60 years in the US) that both sides of the aisle favored trade – that’s gone. The consensus has been shattered in the last year,” he said. “You cannot predict what’s happening – you can listen to certain officials in the administration and then find out a few minutes later they’re being undermined via Twitter from the White House.”
The rise of nationalism, protectionism and reshoring pressures put maritime trade at risk, he said,
“Right now, the idea of trade policy brings tremendous uncertainty to the future of trade, tremendous uncertainty to our trading relations with not only China, North Korea and Japan, but our partners in the North American Free Trade Agreement and also our trading partners in Europe. So we really don’t know what’s going to happen. We’re fearful, but cautiously we think that saner heads might prevail.”
Regarding climate change, O’Connell said that it should “result in increasingly violent storms” and “odd conditions” that affect global trade.
“Where it’s hot, it’s going to be cold, where it’s cold, it’s going to be hot,” he said in explaining what he meant by odd conditions.
However, he predicted that “the most immediate impact” from climate change would come from regulatory agencies that are currently passing legislation in California and elsewhere regulating emissions from maritime-related polluters, like ocean-going vessels and drayage equipment.
“The result of what’s happening here in California may be to – it’s probably likely to — accelerate the diversion of cargoes coming Transpacific eastbound trades going through either the Panama Canal to the ports in the Gulf or Atlantic, or to British Columbia,” he said. “That’s probably the first likely impact of climate change.”
Economist: Global trade outlook good, but demographics, U.S. policy present challenges
