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Supply chain expects weak global growth in 2019

Over a quarter of supply chain professionals surveyed for new report believe that there will be a recession in 2019

Over a quarter of supply chain professionals surveyed for new report believe that there will be a recession in 2019

There appears to be an unease that not everything is entirely well with the global economy according to the Supply Chain Hot Trends 2019 report, which is free to download now. Generally, there appears to be an expectation that 2019 will be a much weaker growth environment than in 2018. Just over a quarter of those asked about their impressions of the global economy for the report’s survey were confident of a reasonably or excellent growth environment. The majority, however, believed that 2019 would be quite weak, with 45.9% expecting a poor growth outlook, 22.55% believing there would be a minor recession and 4.1% acting as doomsayers for a major recession.

The fragility of confidence is not misplaced as there are numerous reasons for concern. Just as China begins to look like it is slowing down and is attempting to wrestle huge debt stocks, it is also facing a major trade war with the Trump administration. Meanwhile, in the US, the government shutdown has already cost the economy $11 billion and the policy environment also looks extremely unpredictable. Any bump from the Trump tax cuts appears to have been very transitory and offers little likelihood of stimulus. Europe cannot sit smugly above this, also getting sucked into the trade wars and several of the region’s major economies skirting recessions, including Germany, the region’s powerhouse. It also has the spectre of Brexit hanging above it. These, alongside other factors, led the IMF to downgrade its global growth forecast twice in three months at the end of 2018 and start of 2019 to its lowest level in three years.

Despite this noticeable concern reverberating around the industry, respondents to the survey continue to expect capacity requirements to continue to grow throughout the year, although not by an overwhelming margin. Across all respondents, 60.5% expect the industry to need to add capacity in 2019, whereas 29.6% expect it roughly to remain static and just under 10% expect a fall in overall capacity.

Within this, Logistics Service Providers (LSPs) were the most optimistic for seeing growth, with three quarters reporting that they expect capacity to increase and solution providers were the least optimistic, at just over half believing there will be expansion in 2019.