World recession cuts chem output in 08-09 - ACC

03 December 2008 22:20  [Source: ICIS news]

Recession threatens chem outputHOUSTON (ICIS news)--Much of the world is in a recession, which will cause chemical output to slow substantially in 2008 through 2009, the American Chemistry Council (ACC) said on Wednesday.

After peaking at 5.4% in 2004, global chemical output will rise by only 2.2% in 2008 and 1.5% in 2009, the council said in its "Year-End Situation and Outlook" report on the global economy and chemical business .

Output should grow by 3.3% in 2010, a figure that would still be below past trends, the ACC said.

Among developed countries, chemical production will shrink by 0.9% in 2008 and in 2009, the ACC said. In 2010, growth will be tepid as the developed nations compete with new production in the rest of the world.

Output for nations with emerging economies will continue to grow in 2008-2010, although at slower rates, the ACC said.

Chemical output is following trends in the world's GDP, the council said.

"A global recession has emerged, and the global economy is on track to post a year of greatly subdued economic growth," the ACC said.

The world's GDP will likely grow by 3.6% in 2008, compared with 5.0% in 2007, the ACC said. Growth will plunge to 2.2% in 2009 before recovering to 3.8% in 2010, a rate that is still below trend.

Germany, Japan, the UK and the US are all in recessions. At the same time, economic growth is slowing in emerging nations, with some actually slipping into recessions.

In the US, the economy is being battered by a credit crisis, a housing slump and a downturn in the automobile industry, the council said.

US consumer confidence is at abysmal levels, and companies are cutting payrolls and capital spending, the ACC said. A strengthening US dollar and weakening global economy will reduce US exports, one of the few factors that had boosted the nation's economy.

"Things will get worse before they get better," the ACC said in its report.

In fact, things could get much worse. Hedge funds could also implode, further damaging credit markets, the council said.

The Chinese economy could make a hard landing, the ACC said. A series of market defaults could occur in emerging economies, causing the credit crisis to spread further.

At the same time, the world is still threatened by terrorist attacks, disease epidemics and disruptions in energy supplies - any of which could damage the economy, the council said.

In fact, drafting any economic forecast in such a climate is especially difficult given the unprecedented events in the world's financial market, the ACC said. A more severe downturn is possible, which would increase the chances of deflation.

The following lists the forecast for chemistry output:

 

2008

2009

2010

US

-1.5

-1.5

1.9

Latin America

3.0

2.5

3.2

Western Europe

-0.1

-0.3

1.7

Emerging Europe

3.8

3.7

4.1

Asia Pacific

4.3

3.5

4.5

Africa/Middle East

7.0

4.4

4.5

source: ACC

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
To discuss issues facing the chemical industry go to ICIS connect


By: Al Greenwood
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