Global GDP worse than official forecasts show, Maersk CEO says

Mr Nils Smedegaard Andersen, chief executive officer at AP Moeller-Maersk.
Mr Nils Smedegaard Andersen, chief executive officer at AP Moeller-Maersk. PHOTO: BLOOMBERG

COPENHAGEN (BLOOMBERG) - The world's economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.

That's according to Mr Nils Smedegaard Andersen, chief executive officer at AP Moeller-Maersk. His company, owner of the world's biggest shipping line, is a bellwether for global trade, handling about 15 per cent of all consumer goods transported by sea.

"We believe that global growth is slowing down," he said in a phone interview. "Trade is currently significantly weaker than it normally would be under the growth forecasts we see."

The IMF on Oct 6 lowered its 2015 global gross domestic product forecast to 3.1 per cent from 3.3 per cent previously, citing a slowdown in emerging markets driven by weak commodity prices. The Washington-based group also cut its 2016 forecast to 3.6 per cent from 3.8 per cent. But even the revised forecasts may be too optimistic, said Mr Andersen.

"We conduct a string of our own macro-economic forecasts and we see less growth - particularly in developing nations, but perhaps also in Europe - than other people expect in 2015," he said. Also for 2016, "we're a little bit more pessimistic than most forecasters".

Maersk's container line on Friday reported a 61 per cent slump in third-quarter profit as demand for ships to transport goods across the world hardly grew from a year earlier. The low growth rates are proving particularly painful for an industry that's already struggling with excess capacity.

Trade from Asia to Europe has so far suffered most as a weaker euro makes it tougher for exporters like China to stay competitive, Mr Andersen said. Still, there are no signs yet that the global economy is heading for a slump similar to one that followed the financial crisis of 2008, he said.

"We're seeing some distortions amid this redistribution that's taking place between commodity exporting countries and commodity importing countries," he said. "But this shouldn't lead to an outright crisis. At this point in time, there are no grounds for seeing that happening."