US chemical leaders see strong global economy

07 June 2007 22:23  [Source: ICIS news]

WHITE SULPHUR SPRINGS, West Virginia (ICIS news)--The global economy is strong and solid and suggests continued growth for chemicals, top industry leaders said here on Thursday, but there are looming risks as well.

Andrew Liveris, chairman and chief executive of Dow Chemical, noted that conventional wisdom would argue that the continuing, if sometimes stuttering, expansion of global commerce and industry simply cannot last forever.

Speaking at a press conference at the annual American Chemistry Council (ACC) business meeting, Liveris said: “We can’t see anything on the horizon that would slow us down, except that some will say that this just can’t last.”

Liveris also serves as the council’s chairman.

Other industry analysts have forecast that the global chemicals industry business cycle will peak in late 2008 and begin an inevitable slide.

David Weidman, chairman, president and chief executive of Celanese, noted that there are three main areas of economic concern for the global economy.

First, inflation remains a worry, Weidman said, noting that despite the downturn in the US housing market and weakness in auto sales, the US Federal Reserve - the US central bank - has declined to reduce interest rates to stimulate commerce. The Fed has said the US economy continues to expand and its chief concern remains inflation pressures.

Weidman said that inflation potential in China’s explosive economy also poses risks to the global economy. If China bears down too hard on development in order to forestall inflation, that too could chill global business.

Second, capacity additions across all industries in China and in chemicals in the Middle East are a cause for concern, said Weidman. China is rapidly adding capacity in steel, concrete, automotive production and chemicals, Weidman said, noting that the Beijing government is aware of the problem and is concerned.

Third, said Weidman, “There is concern whether China and India are going to move toward being consumer nations as well as low-cost production sites.” 

“It doesn’t do the global economy any good if the Chinese are just going to take their money and stuff it into mattresses,” Weidman said.

Still, Weidman and Liveris agreed that the European Union (EU) economy is continuing forward and is strong and robust, and the US economy shows continued, albeit very modest, growth despite the housing and automotive downturns.

Weidman also serves as vice chairman for the council.

By: Joe Kamalick
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