Logistics decision-makers will face new fiscal challenges

The global economic recovery has stalled, said IHS chief economist Nariman Behravesh.

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Economists are revising earlier forecasts in light of recent fluctuations in supply chain metrics and production cycles.

In a recent special IHS global webcast: “What the Global Market Turmoil Means for IHS Forecasts,” shippers were told that the global economy was gripped by a “lost decade,” but that a double dip recession is unlikely.

“The global economic recovery has stalled, said IHS chief economist Nariman Behravesh. “We have downgraded our forecast for both the United States and Europe on recent data that suggests a much more fragile recovery.”

In addition, he said, other risks to the recovery remain, including rising oil prices, faltering growth in emerging markets and fiscal policy and political concerns of both the U.S. and the Eurozone.

Behravesh also warned of “policy shock,” something that was addressed in President Obama’s speech on Thursday evening.

“The single-biggest risk facing both the United States and Europe is a policy mistake—specifically, an advertent or inadvertent tightening of policy,” he said. “The uncertainty around what exactly policymakers are likely to do—faced with the twin challenges of weak growth and sovereign debt problems—is one of the biggest drags on growth.”

He added that the risk with very weak growth in Europe and the United States is not so much that the recovery will implode on its own. Rather, a fragile recovery is much less able to withstand a shock—even a weak one.

At the same time, a “bi-polar” recovery is underway, with emerging nations continuing to gain strength, said Behravesh. “The real risk in these countries is stagflation,” he said, “not recession.”

The Asia Pacific is the “star” region now, said Behravesh, with Japan proving once again to be a most resilient nation. He expects all of Asia to continue on a rapid path of expansion.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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