The 2015 edition of the Davos World Economic Forum, the annual gathering of the most esteemed international economists and wealth experts, has come to an end. And as has become customary, SuperyachtNews.com has reflected on how the predicted trends for the year ahead could affect the superyacht industry.
Reflecting on the Wall Street Journal’s (WSJ) excellent coverage of the event, the good news at least, is that we should be “fractionally more optimistic” about the outlook for Europe in 2015, according to Brussels bureau chief, Stephen Fidler.
Fidler’s view is that, when combined, plummeting oil prices and a perennially weakened euro will actually trigger growth. Up to now the latter has been a key market driver for European order book, offering outside wealth greater purchasing power when shopping around Europe’s shipyards.
Conversely, projects already underway at the same European yards have had chunks shaved off their value and the relative cost of continuing with construction will have risen. With the order book plateauing somewhat, the FX disparity between the strong dollar and the weak euro is something builders will feel implored to exploit this year.
However, the spectre of Greece leaving the Eurozone, however unlikely, could still serve to derail European stability in the short-term. And, although a weak euro is good for industry, in chief European commentator, Simon Nixon’s words, “the psychological consequences [of a Greek exit] would ricochet back into the markets.”
So while Europe should continue to be the go-to place for superyacht buyers in 2015, suppliers and builders should be wary of any unforeseen political changes whose negative impact outweighs the benefits of a low currency value.
swiss-image.ch/Photo by Moritz Hager.
And furthermore, WSJ’s managing editor, Gerard Baker questioned how long US industry would tolerate European reliance on American wealth. “Everyone is counting on exporting their way out of their mess by exporting to the United States and the question is how long they’ll tolerate that [before pressure forces protectionist measures].”
Gren Manuel, editor of Financial News, also warned that “behind the scenes” bankers were still reluctant to lend to European businesses, a frustration for companies throughout the supply chain no doubt, considering the growing scope of superyacht projects and the burgeoning amount of capital required by small or niche businesses to finance these projects over a prolonged period.
So, while the experts are cautiously optimistic for the year ahead, it is heavily reliant on Europe continuing to walk the tightrope without toppling off.
The industry’s most comprehensive analysis of the market – The Superyacht Intelligence Annual Report 2015 – is coming soon. To reserve your copy of this industry intelligence tome, please contact Charles Finney.