THE EFFECTS OF GLOBAL ECONOMIC GROWTH ON DRY BULK FREIGHT RATES

Dry bulk freight market is one of the most important indicators of global economic activity as it is the market for the transportation of raw materials that make up final products. So, the world economy is one of the most important demand factors for maritime transport. But supply in the maritime market is inelastic and the market cannot immediately respond to sudden demand growth and rates declines in the short run. Therefore, the sudden increases and decreases in the economy result in extraordinary income changes in the freight market. In this framework, the influence of economic growth on freight rates is an important issue to be examined. This study aims to contribute to the current literature by empirically examining the effect of economic growth on the dry bulk market. World GDP (Gross Domestic Product) was selected as a measure of economic activities, and BDI (Baltic Dry Index) was chosen as a measure of dry bulk freight rates. The dataset covers the years between 1985 and 2016 on annual basis and consists of 32 observations. The relationship between variables was tried to be determined by correlation and regression analysis. According to the results of the study, the positive relationship between the variables was determine and the BDI's response to GDP changes was found to be greater. These results confirm how risky the maritime market is