Thursday, April 23, 2009


There are a variety of economic indicators out there that people are using to help them determine when the global economy will crawl out the recession crater. One indicator I would look at is the Baltic Dry Index. This index provides an assessment of the price of moving major raw materials by sea. It takes into account 26 shipping routes that are measured on a time charter and voyage basis and the index covers certain dry bulk carriers carrying a range of commodities including coal, iron ore and grain. Every working day, the Baltic surveys the brokers around the globe and inquires about the cost to book various cargoes of raw materials on various routes.

This is an important economic indicator because the dry bulk consists of raw materials that are used in production of intermediate and finished goods, i.e. concrete, steel and food. It is a very good indicator to determine future economic growth and production. As you see this index increase, it could be a foreshadowing that the economy is starting to turn around. For example. in May 20, 2008, the index was 11,793 points, which was its record high level since its introduction. By the end December 5, 2008, the index dropped by 94% to 663 points. So keep an eye on this indicator rising.

Ironically, this increase in the index could also be an indicator of an increase in carbon dioxide emission levels. An increase in the index means more ships transporting goods, which release Co2 particles into the atmosphere, to factories to build products, which will require more electricity. This electricity in many places is fueled by coal, which releases an extensive amount Co2. In fact, burning coal is the largest contributor of Co2 emissions. Therefore, an economic down turn may not be good for our pocketbook, but it is good for the environment.

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