World Economics-Related Issues

World Economics-Related Issues
  1. World economy today and future prospect

The world’s economy is contemporarily of great concern across the world. Recently, there has been a significant decline in rate growth of gross fixed capital formation and aggregate demand. Such trends can be associated with the weak aggregate demand, reduction in commodity prices, and increased instability of financial markets of major economies. However, the world economy is expected to grow in the next year, particularly due to more friendly fiscal policies and accommodative monetary stands that are to be developed worldwide.

The least developed countries are still struggling to maintain their economic status caused by the minimum demand for export, low prices of goods, minimum capital outflows, and poor investment strategies. Nevertheless, the economic growth in these states is expected soon. The developed nations, on the other hand, greatly contribute towards the progress of the world economy. China, for instance, supplies various commodities to the global market. The economy of the developed nations is likely to improve in future. Such a result will be achieved due to the enhanced control of inflation, improved investments and general aggregate demand.

  1. Global sea trades and trends

The IHS Global Maritime Trends 2016 documented five trends in the maritime sector. First, there will be reduced demand for the superior goods. Commodities such as gold, coal, and crude oil are at the risk of their prices reducing over a few decades. Second, a decrease in the shipping rate is also expected. It is likely to occur due to the potentially slow rate growth in the next five to ten years. The tanker shipping, however, is expected to remain widely used. The third trend concerns general economic growth and shipping in China. This is due to the presence of the governmentally controlled steelmakers. It will greatly lower the morale and expectations of individuals who use chartered ships to travel. The fourth trend is the increased global supply of oil that will prevail when Iran is sanctioned. When denied the opportunity to provide the oil, the nation will strive to export the product to the world market, thus improving the use of shipping industry. Finally, the fifth trend suggests that with readily available shipping data, there will be the improvement in transportation sector due to enhanced market visibility and new pricing trends. These data will be highly beneficial because of contribution to the proper analysis of shipping risks and opportunities.

  1. Global air trade analysis and trends

Apparently, global air trade is one of the most dynamic industries today. About 6% of airline traffic passengers were recorded in 2014. China alone has contributed to 23% of the world global airline travelers over the past ten years (Scott 28). These numbers are likely to grow as affordable prices attract new customers and organizations quickly change their strategies to match the emerging trends. Significant among the trends is reverse innovation where companies are effectively exploring emerging markets instead of focusing on existing markets. For instance, the influx of airlines from the Middle East to Africa serves as evidence. Reclassification of trade in the global air is another significant trend today. Through reclassification, organizations explore technology to enhance their operational speed and minimize their operational costs. Re-classification as a new trend focuses on taking market leadership within a short time through exploration of technoloical avenues. Finally, global air trade is partner to ongoing liberalization. Major airlines developed new strategies to enhance their liberal links through security platforms. Pandemics, terrorism and related risks in international security, as well as changes in climate, are some of the factors that contributed to the current trends of liberalization in the globe air trade.

  1. S. economy today and its prospects

U.S. economy contributes considerably to the development of the world economy. According to the IMF data, U.S is the sixth worldwide contributor of per capita income. Moreover, it is estimated that, by 2017, U.S. GDP is to increase by 2.1% (Scott 101). Several U.S. residents own investments into many parts of the world. These individuals tend to promote the use of airlines to and fro their native country, tremendously assisting this industry to prosper. According to Graham et al., the USA is endowed with numerous resources to maintain its top position in economic growth (103). Therefore, the countries leaders undertake measurers to skillfully harness their abundant natural resources, what is facilitated by their highly skilled labor force, favorable infrastructure, sophisticated technology, beneficial financial and monetary policies, as well as proper retail and healthcare services. Also, the USA is the manufacturer that supplies 15% of its produce to the world market (Scott 480). It is, thus, the world’s second-best manufacturer providing different kinds of automobiles, aircraft, machinery, chemicals, and telecommunication. Judging from the country’s current positions and available resources, its economy is to flourish.

  1. U.S. sea trade analysis and prospects

U.S. shipping industry faces several barriers. Consequently, the growth in sea transportation industry is extremely slow as compared to the airlines. One of the primary obstacles is connected with the increased restrictions. For instance, shipping to Cuba was confined because of the security issues, thus limiting the U.S. sea trade. Moreover, people prefer more affordable and convenient traveling means. There is also a thorough examination of the transit commodities, what leads to numerous inconveniences being incurred when using ships (Ross 48). Further, the biggest concern for the U.S. government today is the security on top of the influx of immigrants and illegal drugs. The sea is the most vulnerable way through which these concerns of the U.S. government are enhanced. Thus, more restrictions in the U.S. sea transportation are eminent and, thus, could further jeopardize operations in this industry that already is below the desired thresholds. The future of sea trade in U.S. is, therefore, bleak as people will choose more flexible and cost-friendly transportation and traveling means.

  1. The U.S. air trade analysis and prospects

Airlines are considered a chief transport used in the USA. For instance, in 2014, the airline companies realized a total of more than $12 billion. This amount increased further by $1 billion in 2015 (Scott 91). It happened due to the increased affordability provoked by the cheap fuel and low costs to be incurred when using this transport. The numbers are also expected to increase in the coming years.

  1. Global transportation market and global supply chain

There is an important connection between the global transportation market and the global supply chain. Countries with proper, efficient, cheap and reliable means of transportation tend to supply their gooods cheaply to their existing markets. Countries such as the USA and China provide their products to the global market due to their fast and efficient means of transport. On the contrary, countries with unfavorable infrastructure have hardships providing their supplies. Their commodities are localized. Therefore, the level of transportation progress is strongly interlinked with the market supply. Badly developed infrastructure causes the imbalance of trade and payment.

  1. Chinese sea trade and trends

China is strategically located near water bodies and suitable harbors. The Chinese South Sea is known to hold a significant importance to China’s sea trade due to its strategic linkages to strategic trade partners. The most trending aspect of the Chinese South Sea is the fact that it is a location connected to harbor oil deposits that can only be equated to the Saudi Arabian. Such endowment with resources makes the Chinese South Sea a boiling point for conflict with neighbors who show interest in ownership of the resources. Moreover, being associated with high fuel consumption of about 22% that are available in China, sea transportation is to develop well. Consequently, there is a plan to expand the fuel consumption in China by up to 31% by 2020, what would improve the use of sea transport (Prasad 232). Thus, the sea trade in China is and will be on the rise.

  1. Chinese-U.S. Trading: Win-Win Partnership

China, being a rapidly thriving nation in terms of economics, poses a threat to the U.S. The latter, therefore, seeks to control more trade barriers to transport its products to China and get the entire economic gain. Most importantly, the USA needs to produce cheap commodities or charge favorable prices for them to be able to compete with China, which produces high-quality products at low prices. China has been taking steps in order to attain the economic lead. While the US advocates for free trade, China conducts summits, such as the 2003 summit, with the great effort to promote China-ASEAN free trade. Such measures help the country to outcompete the USA. Beside the competitive aspect of trade links between China and the US, Meixell and Vidyaranya argue that both economies have witnessed some benefits as well (104). China, for instance, is an emerging market for US products, thus posing as a new standpoint for emerging innovations as well as markets. More benefits of US-China trade can be evident on how both nations are geared towards a common course in international economic prosperity.

  1. The crisis in 2008 and its effects on the world economy

The great economic crisis of 2008 is a signpost helping to understand the global economic history. It started with the subjective ambition of the initial lenders who provided too many loans to individuals and nations. As a result, the global economy slowly began to reduce its development speed. The consequences of the crisis were experienced in the subsequent year. It led to the massive decline and negative events in the world economy, for example, the great outbreak of the world bankruptcy due to overwhelming of the Lehman Brothers Bank for their excess liabilities. The U.S. government also withdrew their financial help to many banking institutions. The implications of such actions were globally felt since several nations strongly rely on the help of the others. All over the world, major industries underwent the recession in their profitability indices, subsequent to inefficient flow of currency, goods, and services during that period.