The Baltic Dry Index, reflecting the freight rates of dry-bulk ships, has collapsed by a whopping 83%. What this means for the global economy, however, is uncertain.
The Baltic Dry Index became a popular indicator for future economic growth after a collapse of 94% coincided with the great financial crisis in 2008. But when the index fell 75% in 2015-2016 to even lower levels than where it is now, no major economic crash followed. Also, the 300% rise in 2019 to the highest level in ten years was not followed by an economic boom. Hence, the forecasting power of the Baltic Dry Index seems limited.
One likely explanation for this is that it only looks at the shipment of dry bulk or commodities, which represent only part of the global economy.
