Citigroup lowers 2008 global growth forecast

20 December 2007 11:46  [Source: ICIS news]

LONDON (ICIS news)--Citigroup has lowered its global GDP growth forecast for 2008 by 10 basis points (bps) to 3.4% due to lower expectations from Europe, Japan and the US, the bank said on Thursday.

 

Citigroup lowered its growth forecast for both the Eurozone and Japan by 20 bps to 1.9% and 1.4% respectively, while the US was decreased by 10 bps at 2.4%.

 

The projected slowdown in 2008 was slightly offset by emerging Asia markets, which were raised 10 bps at 8.7% growth - China’s GDP was expected to grow by 11%.

 

The bank said its outlook for the chemicals industry varied strongly due to the breadth of products, but it continued to recommend companies with investment strategies in agriculture, climate change, portfolio transformation and Asian infrastructure.

 

“Technology plays, strong business models, and secular themes have driven lofty valuations in stocks in agriculture, industrial gases, metal chemistry, and solar materials,” said Citigroup. “Conversely, industrial chemical stocks have de-rated strongly over 2007 given concerns about demand.”

 

The bank said fertilizer producers like Uralkali, Israel Chemicals ad Yara saw the best performance last month, while specialty chemicals firms Clariant, Yule Catto and Croda underperformed.

 

Clariant’s third quarter operating profits were 19% below the consensus forecast due to the weak dollar, rising raw materials costs and a lack of urgency in restructuring efforts, said Citigroup.

By: Mark Watts
+44 20 8652 3214

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