EXECUTIVE IN PROFILE DEBATE
Shipping and inflation Are ships a good hedge against today’s sky-high inflation? Many owners reckon so, but famous economists show the historical pitfalls of such theories
T
he last time global inflation was this rampant Ronald Reagan had recently turfed Jimmy Carter out of the White House, Raiders of the Lost Ark was about to be premiered and Soft Cell’s Tainted Love was top of the UK charts. Inflation is now a daily front page news item, with families around the world tightening their belts, looking at every aspect of their weekly spends as soaring bills hit home. Inflation has become a “clear and present danger”, a recent blog post from the International Monetary Fund (IMF) stated. The IMF is projecting inflation will remain elevated for a long time.
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“The risk is rising that inflation expectations drift away from central bank inflation targets, prompting a more aggressive tightening response from policymakers. Furthermore, increases in food and fuel prices may also significantly increase the prospect of social unrest in poorer countries,” the IMF warned. The World Bank has also been discussing inflation, saying recently that the ongoing war in Ukraine will result in expensive food and energy
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for the next three years, intensifying fears that the global economy is heading for a rerun of the weak growth and high inflation of the 1970s. For shipping, however, many would argue today’s once-in-a-generation economic outlook is favourable. At Slide2Open’s recent Shipping Finance conference in Athens many shipowners discussed inflation. “We are in a high inflationary environment and obviously this
High energy and steel prices will push up newbuilding and demolition prices and so be supportive of the entire secondhand price curve
”
maritime ceo
