The IMF has put out an improved outlook for the economies of China and India for 2023, but some in dry bulk shipping are taking such optimism with a grain of sea salt. The IMF expects gross domestic product (GDP) growth for China, the world’s leading iron ore importer by far, to rise to 3.4% next year from 2.2% this year, according to a report. The UN financial body expects India’s GDP growth to reach 6.1% for 2023, up from an expected 3.3% for this year. The IMF expects the GDP for the ASEAN-5 nations of Indonesia, Malaysia, the Philippines, Singapore, and Thailand to expand by 4.9%, up from 3.8%. But only time will tell if IMF’s optimistic GDP growth outlook for next year comes to fruition, a dry bulk shipowner told TradeWinds. “I hope it’s the truth because dry bulk will go up if this happens,” the owner said.

“Nothing is implausible, but it means that China abandons its zero-Covid policy and figures out how to deal with its problems in the housing construction market, and the US and Europe don’t go into a recession.” The IMF expects only 1% GDP growth for the US and a 1.4% expansion for Eurozone countries in 2023. It is great to see higher GDP growth numbers, but it is impossible to tell where the global economy will be next year, said John Kartsonas, founder of Breakwave Advisors, an asset management firm that runs a dry bulk ETF platform. “A year ago, IMF had the US growing 5%, and now we end up with maybe 2%,” he told TradeWinds. “But if indeed economic growth accelerates, especially in China, this is positive for dry bulk shipping.”

Kartsonas noted that China plans to inject a significant amount of stimulus money into its economy, a move that could boost iron ore imports for infrastructure and construction projects. “Still, for China, you are looking at a slower growth versus the last decade, but still, the economy has expanded so much that the historical high single digit rates will be difficult to reappear,” he said. But even the futures market indicated skepticism for better bulker spot rates in 2023.

The Baltic Exchange’s Capesize 5TC basket of spot-rate averages across five key routes slipped 2.1% on Wednesday to reach $18,241 per day. FFAs for the route basket in 2023 came in at $13,406 per day on Wednesday. But Stamatis Tsantanis, chief executive of capesize owner Seanergy Maritime, still held a positive outlook on dry bulk shipping. “Despite the economic slowdown, we expect [infrastructure] projects and stimulus in China to be increased,” he told TradeWinds. “In addition, once coal inventories in Europe start to deplete, we should see restocking to cover the continent’s energy needs. We remain very positive for the cape trade.”