As the global economy continues to navigate a patchy recovery, the dry bulk market found some footing this week, with the Baltic indices providing a degree of resilience amid otherwise fragile macro conditions. Leading the charge, the Baltic Capesize Index neared its highest level for the year, before easing slightly to $23,572 per day. The Panamax segment, which had briefly slipped below five-digits for the first time since early March, recovered sharply by week’s end, settling at $11,210 per day. Activity in the geared segments was more stable, with Supramax and Handysize rates closing at $11,796 and $10,802 per day respectively – both marginally down on the week. While these spot market developments offer some encouragement, they remain framed by broader economic headwinds. Inflationary pressures have continued to subside, but industrial activity is still tepid, and monetary policy remains tight in several major economies. The outlook is further complicated by China’s slower-than-expected post-pandemic recovery, ongoing interest rate rigidity in the U.S. and Europe, and a shifting geopolitical landscape. These dynamics are already reshaping global trade flows and vessel deployment strategies, with demand evolving unevenly across key commodities such as coal, bauxite, grains, and iron ore.
Following a robust finish to 2024, global GDP growth moderated in the first quarter of this year. According to the OECD, part of this softening reflects a front-loading of trade activity, as businesses rushed to ship goods ahead of anticipated tariff increases. Looking ahead, the OECD cautions that persistent trade frictions, tighter financial conditions, and fragile household sentiment are likely to weigh on economic momentum. The latest forecast projects global GDP growth to decelerate from 3.3 percent in 2024 to 2.9 percent in both 2025 and 2026, with a more pronounced slowdown expected in North America. Trade, closely linked to industrial production and household consumption, is also expected to lose steam. Merchandise volumes picked up at the end of 2024 and into early 2025, largely due to a surge in shipments front-loaded ahead of U.S. tariff adjustments. Notably, U.S. imports spiked during this period, echoing similar trends in container throughput and air freight volumes. But this momentum appears unsustainable. Container freight rates have already come under pressure, with April spot prices falling considerably since the start of the year. Survey data on export orders likewise point to softer conditions ahead, reinforcing expectations of a deceleration in global trade.
The regional economic picture remains mixed. In the United States, the outlook has dimmed considerably, with higher import duties, reciprocal trade measures, and rising policy uncertainty expected to drag growth lower. The OECD anticipates U.S. GDP to slow from 2.8 percent in 2024 to 1.6 percent in 2025 and 1.5 percent in 2026. Canada and Mexico face similar headwinds, including reduced trade activity, stubborn inflation, and limited room for policy manoeuvre. Canadian output is forecast to expand by just 1.0 percent in 2025, while growth in Mexico is projected to drop sharply to 0.4 percent before staging a modest recovery the following year. In Latin America, Brazil’s economic prospects are also turning more cautious. GDP growth is expected to ease from 3.4 percent in 2024 to 2.1 percent in 2025 and further to 1.6 percent in 2026. While government spending will offer some support, the combined weight of tight monetary policy and new trade barriers is set to dampen both domestic and export-oriented activity, leaving Latin America’s largest economy facing a complex set of challenges.
Across the Atlantic, Europe continues its slow and fragile recovery. The euro area is projected to grow by just 1.0 percent in 2025, edging up to 1.2 percent the following year. Trade friction remains a key drag, though partially offset by ongoing disbursements from the EU’s post-pandemic recovery fund and expectations of monetary easing later this year. Germany is forecast to benefit from increased defence and infrastructure spending by 2026, but near-term growth remains muted. In the UK, the recovery remains similarly constrained. While some forward momentum is expected, the drag from trade uncertainty and political instability is expected to cap GDP growth at 1.3 percent in 2025, slowing further to 1.0 percent in 2026.
In Asia, attention remains firmly on China. After an unexpectedly strong start to 2025, the Chinese economy now faces mounting headwinds as recently imposed U.S. tariffs, including the removal of the de minimis exemption, begin to take effect. Coupled with retaliatory measures, the external environment is expected to weigh on exports and industrial output. Nonetheless, Beijing’s domestic stimulus push – centred on consumption subsidies and income transfers – is likely to provide a buffer against steeper declines. Chinese GDP is projected to moderate from 5.0 percent in 2024 to 4.7 percent in 2025, easing further to 4.3 percent in 2026. India and Indonesia continue to outperform many of their peers, buoyed by strong domestic demand and sustained infrastructure investment. India’s economy is expected to expand by 6.3 percent in FY2025-26 and 6.4 percent in FY2026-27. Indonesia is projected to grow by 4.7 percent and 4.8 percent over the same periods. Elsewhere in Asia, Japan and South Korea present a more tempered growth outlook. Japan is set to benefit from robust consumer spending and elevated public investment, but weak external demand and rising trade friction are expected to weigh on the export sector. As a result, growth is projected to decelerate from 0.7 percent in 2025 to 0.4 percent in 2026. South Korea, by contrast, is expected to rebound more meaningfully, with improving labour market conditions and stronger household incomes underpinning a recovery from 1.0 percent growth in 2025 to 2.2 percent in 2026.
Overall, the OECD characterises the global outlook as increasingly fragile. A rising tide of trade protectionism, paired with greater policy uncertainty, is already eroding confidence among both businesses and consumers. The institution warns against retreating into economic nationalism, and instead calls for a renewed emphasis on diversification, international cooperation, and flexible policymaking capable of navigating this new era of heightened uncertainty. While the age of rapid globalisation appears to be over, what has emerged is a more fragmented but still interconnected order – what the OECD terms “slowbalisation”. This emerging paradigm is increasingly visible in the dry bulk market. This evolving backdrop is mirrored in current shipping markets. The spot market remains at relatively low levels, a sign of continued caution – but has edged higher compared to last week, suggesting a fragile but persistent undercurrent of activity. In this environment, the challenge for shipping remains one of adaptation: staying responsive to shifting trade flows, commodity reconfigurations, and the broader recalibration of global economic linkages. The path forward may be uneven, but activity – albeit fragile – continues to flow.
Data source: Doric