FedEx warns over slowdown
Fred Smith, the chief executive of FedEx, the logistics giant, has warned that global growth will not be enough to counter a US slowdown, raising doubts over corporate America’s ability to export its way out of a sluggish domestic economy.
The warning from Mr Smith, a respected business leader whose company is both a gauge and a beneficiary of globalisation, will deepen investor pessimism over the prospect that the world economy could “decouple” and survive a US downturn unscathed.
In an interview with the Financial Times in which he also indicated he would like his successor to come from within FedEx, Mr Smith dismissed suggestions that the rapid pace of economic development in emerging markets would offset a US slowdown.
“Growth elsewhere helps cushion the shock but nothing can displace a slowdown in the US,” he said. “I don’t care how optimistic people are about China or anything else, [the US] is still 25 per cent of the world’s economic activity so when it slows down it is going to have an effect.”
Three weeks ago, FedEx issued the second profit warning in a month, citing flagging demand for US freight and escalating fuel costs. The announcement confounded investors’ predictions that a weak dollar and resilient economies in the rest of the world could help multinationals buck a domestic downturn.
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