"The world economy is rebounding after a crisis, and with it restored, world trade - about such phrases can be read in June when the World Trade Organization (WTO), summed up the first quarter of 2010. For example, exports of Japan for the first quarter grew by 33%, China - 29%, USA - 20%. Imports during January-March in China grew by 65% year on year in India - 55%, in Brazil - at 36% in the U.S. - 22%.
WTO forecast for 2010 optimistic: world trade to grow by 9,5%. At the same time, exports of developed economies will grow by 7,5%, while exports of developing countries (including CIS) - 11%. "This means that the trade is light at the end of the tunnel. This is certainly a good prognosis and good news for the world economy", - said WTO Director General Pascal Lamy.
Statistics of world trade in the first quarter was published in June. Is there a more operational status indicator of world trade? Yes, it's Baltic Dry Index. The index reflects the cost of transportation of dry cargo (coal, ore, grain, etc.) by sea on the twenty-six major trading routes. The volume of traffic depends on economic activity, and this means that the Baltic Dry Index allows this same activity monitor. It is therefore considered that the Baltic Dry Index is a leading indicator of world trade.
During the period from May 25 to July 15, Baltic Dry Index has established a 15-year record for the duration of the fall (see chart "Baltic Dry Index"). Over the past 25 years there were only 3 more times so much on the duration of the period of decline. Experts N. Cotzias Shipping Consultants point to China. There are 2 versions.
The first version, in my view, the optimistic: China specifically temporarily reduced the purchase of imported commodities in order to force in reducing prices to charter vessels, thereby lowering their cost of shipping. The logical chain is simple: we will reduce purchases, we need fewer ships to transport goods, prices of transportation are falling. Then we gradually restore the volume of purchases of raw materials. And then drop Baltic Dry Index temporary.
The second version, in my view, pessimistic. The economy of China began a real slowdown. Industry in China has to consume less coal, ore, oil and other raw materials. And then drop Baltic Dry Index to stay.
The second version, in my view, is closer to reality. Only two facts. In China, 65 million (65 million) of empty apartments and houses. In China, according to an executive order by the end of September 2010 will be shut down 2 thousand 087 industrial enterprises.
What do these 65 million empty apartments? This is a result of policies of the Chinese authorities to stimulate domestic demand. In 2009 the Chinese economy, according to various estimates, was "pour" 2.1 trillion dollars in loans. One result of this credit boom was a bubble in the Chinese real estate market. After 65 million apartments - about 3 billion square meters of housing. Average cost per square meter of housing in China 2,5-3,0 thousand dollars. Thus, for the purchase of vacant housing need 9 trillion dollars! Outside the village in China with approximately 150 million people with an average annual income of 6-7 thousand dollars. Can they afford an apartment worth 100 thousand dollars? Нет, не смогут. No, I will not. Because 65 million households earn together $ 450 billion a year. If the apartment give half earnings - this is 225 billion dollars of the required 9 trillion dollars. It will take 40 years to buy all the already constructed apartments. This means that China today is in a situation in which there were the U.S. in 2006, when it began to "crumble" the real estate market.
Therefore, when Chinese authorities say the closure of 2,000 enterprises, because they allegedly inefficient energy consumption and negative impact on the environment - it is not true. The Chinese authorities have closed factories producing cement, steel, aluminum, coke, paper and other materials throughout the country because their products are no longer needed.
This means that the import of commodities in China declines to stay. This means in turn that the Baltic Dry Index continues to fall. A trace should start to fall all markets. Because the Baltic Dry Index correlates well, in particular, with the index Standard & Poors 500 (see chart "Baltic Dry Index and the S & P 500").
Thus, we can say that the Baltic Dry Index warns us about the second wave of global economic crisis.
Translated from the Russian Original at http://www.e-xecutive.ru/blog/around_banks/4815.php
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