Manufacturers say outlook is dire, ’09 recovery in doubt

12 January 2009 18:19  [Source: ICIS news]

WASHINGTON (ICIS news)--The world is facing its most bleak business outlook since World War II and may see a sharp slowdown in China and a precipitous fall in US exports to near zero growth this year, US manufacturers said on Monday.

The Manufacturers Alliance said in its quarterly economic forecast that there is a “nearly synchronized slump in industrialised country output”.

“And, alarmingly, for the critical Asian region and for global prospects as a whole, there is potential for a sharp slowdown in the Chinese economy,” the alliance said.

Because of the global downturn, the alliance warned that US export trade - which has been the one sustaining bright spot amid otherwise declining US economic indicators - will likely shrink to bare minimum growth this year.

The alliance expects that “growth of total US goods and services export demand to slow from an estimated 8.4% in 2008 to 0.9% in 2009”.

That minimal growth forecast for US exports this year, the alliance noted, is “significantly below the previous quarterly forecast of 7.3% for 2009”.

For industrialised countries other than the US, the alliance expects gross domestic production (GDP) to contract by 0.7% in the fourth quarter of 2008, a further decline of 1.3% in the first quarter this year and an additional GDP drop of 0.8% in the second quarter.

In the alliance forecast, industrialized countries other than the US include chiefly Canada, the EU and Japan.

For those nations and regions the alliance says it expects no GDP growth in the third quarter this year and the beginning of a modest recovery in the fourth quarter with growth inching up by 1.7%.

“Aggregate developing country growth is expected to be softer than previously forecast,” the alliance said, “due in part to weaker prospects for China and Brazil.”

The alliance said it expects GDP growth of 3% for developing nations in the fourth quarter of 2008, 2% growth in the first quarter this year and an even more modest 1.7% gain in developing countries’ GDP for the second quarter.

“Expectations are for a further deceleration to 1.5% GDP growth during the third and fourth quarters of 2009,” the alliance said of developing nations.

Manufacturers Alliance economist Cliff Waldman went so far as to question the general expectation among business analysts for a global economic recovery beginning later this year.

“While a number of forecasters have - with trepidation - suggested that a measure of economic and financial stability might return to the US and global economies sometime during the second half of 2009, visibility is thwarted by the strength of current downward forces,” Waldman said.

The 450 member firms in the Manufacturers Alliance include US and multinational companies and a number of international chemical producers.

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By: Joe Kamalick
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