Weak economic activity and slack trade curbed air cargo traffic growth

Since 2011, two principal causes have been responsible for weak air cargo growth: an underperforming world economy and lackluster growth in trade.

In 2015, worldwide GDP growth continued a pattern of below-trend growth that has been evident since the global economic downturn. Several emerging markets continue to face a challenging economic environment amid low oil prices, and the advanced economies are enduring a relatively slow economic recovery. Yet, despite current challenges and many political risks, fundamental growth factors, such as productivity increases via technology diffusion, economic reform, and available production capacity, remain in place. GDP growth is expected to grow above trend by the end of the decade and average 2.9 percent over the next two decades.

In a struggling world economy, global goods trade has experienced slower than expected growth as well. Trade growth averaged just 2.9 percent between 2012 and 2015, a sluggishness not seen since the 1980s. Generally, cyclical, and thus largely temporary, effects explain most of the weakness. In particular, weak industrial production is key to understanding the most recent weakness in global goods trade. A lack of solid global industrial growth means fewer goods are traded, both in final and intermediate form.

Beyond the current trade slowdown, some longer lasting factors, such as a shift toward services trade, shortening of supply chains, and the threat of protectionism, pose risks to global trade.

GDP growth below trend, but forecast to recover

Air cargo is closely linked to global trade and industrial production