Speaking at the SteelOrbis 2016 Spring Conference & 74th IREPAS Meeting held in Lisbon on April 10-12, Ulrich Leuchtmann from Commerzbank AG said that the outlook for the global economy is not bright, with only sluggish growth expected in the EU. He stated that, even if commodity prices do not fall further and even if they indicate some recovery, the steel industry still has to adapt to the new low levels of prices.
According to Mr. Leuchtmann, since 2012 inflation rates have been falling despite ultra-expansionary monetary policies. He went on to say that central banks have lowered interest rates to levels not seen in 20 years, resulting in an environment where investment should be very profitable and also which should be favorable for consumption; however, this has not worked. The Commerzbank official pointed out that the central banks know their measures are not working “but they have no other choice than continue doing what they are doing hoping that doing it longer will work in the end”.
Mr. Leuchtmann said he fears these policies will lead to a situation where the global economy might end up in a scenario like Japan with zero inflation. “Growth rates will come down permanently if these low inflation rates continue. In Japan [inflation rate at zero for almost a year], growth rates are not picking up. If central banks do not get us out of this situation, growth rates will not pick up,” he added.