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Trade May be Flagging, Global Growth at Risk

Posted August 04, 2014

Under Economic Issues, International Trade Issues

(James Saft – Buenos Aires Herald)

With 90 percent of everything traded around the world travelling by sea, the fall in shipping prices is a sign worth paying attention to

While most investors are transfixed by trying to anticipate the next jurisdiction-hopping, tax-driven merger, there are small but growing signs that global growth may be headed for a slowdown.

Perhaps the most eye-catching figure is the collapse in the Baltic Dry Index (BDI), a market measure of demand for shipping capacity, which is down about 65 percent so far this year. With 90 percent of everything traded around the world traveling by sea, the fall in shipping prices, while probably overstating matters, is a sign worth paying attention to. The fall in the BDI is at least in part driven by lots of new shipping capacity coming online, but there are other indicators that trade momentum is slowing and could be taking global growth with it. Read more here.