Economic outlook improving in U.S., developed countries - The Packer

Economic outlook improving in U.S., developed countries

10/23/2013 01:59:00 PM
Tom Karst

PMA Fresh Summit 2013NEW ORLEANS — An improving U.S. economy bodes well for better demand for fruits and vegetables at home, but slowing growth in some developing countries will temper export prospects.

A Fresh Summit 2013 workshop on the global economic outlook featured Rabobank economists who provided insight on world economic growth forecasts, global liquidity and the pace of merger and acquisitions in the agricultural sector.

Asia remains a formidable driver for global growth, said Vernon Crowder, senior analyst for food and agribusiness research for Rabobank. Developing countries in Asia have contributed to the worldwide increase in the production of fruits and vegetables. Global fruit output has increased 35% in the past decade, Crowder said.

Per capita consumption rose from 2001 to 2006 but declined after the onset of the recession in 2006, he said.

Crowder said consumption of processed and fresh fruit and vegetables (excluding potatoes) has been flat to declining in many developed economies from 2007 to 2012. The perceived higher cost of fruits and vegetables compared to processed food contributed to the downturn, as well as marketing, convenience and socioeconomic factors that favored processed food, he said.

“Even though it may be a perception problem, the consumer has a perception that other foods are cheaper and more convenient,” Crowder said.

Crowder said heavier marketing and advertising of fruits and vegetables has the potential to increase demand, however.

“We see that as an opportunity for the industry to focus on those convenience aspects of their products,” he said.

Most of the global trade in fruits and vegetables is concentrated in developed countries, and Crowder that the potential to develop trade in the developing world remains an attractive growth prospect.

Looking at the effect of global monetary policy, Elwin De Groot, senior European strategist and financial markets researcher for Rabobank, said the world’s economy seeks a balance in monetary policy.

“If you get insufficient liquidity, the system collapses, but if you get too much, then you get irrational exuberance,” he said.

Overall, De Groot said the global economic growth is forecast at 3% for 2013 and 3.5% for 2014.

China remains by far the biggest driver of the global economy and the U.S. is second but improving. While developing countries have recently led global growth, De Groot said developed countries — notably the U.S. — are becoming more vibrant.

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