Manufacturers see weak economic recovery late this year

13 April 2009 18:03  [Source: ICIS news]

WASHINGTON (ICIS news)--A weak recovery among industrialised nations and acceleration of developing country production could begin in the last months of this year, an analysis group for major manufacturers said on Monday.

The Manufacturers Alliance said in its regular quarterly economic outlook that “slightly improved US economic data could be a harbinger of positive signals” for the moribund global economy.

Alliance economist Cliff Waldman said that signs of firming demand in the US and US and global efforts to increase credit availability suggest that “a weak rebound in industrialised country output and a modest acceleration of developing country output could begin in the later months of 2009”.

Waldman said that “rock-bottom prices for fuel and commodities, the lowest interest rates in a generation and a growing effort to repair bank balance sheets” should be sufficient to restore “at least weak positive activity” in the worldwide economy.

US exports of goods and services also will be slow to recover but will turn up next year, the alliance said.

“The growth of total US goods and services export demand [is expected] to contract by 8.3% in 2009, the deepest annual contraction since 1958,” the alliance said.

“A modest rebound of 1.2%, however, is anticipated during 2010 as shattered global confidence is rebuilt.”

Worldwide, most advanced economies are likely to experience weak recoveries in GDP and in manufacturing output in 2010, the group’s outlook said.

“GDP in non-US industrialised countries - which include Canada, the Eurozone plus Denmark, the UK and Sweden and Japan - is expected to contract by 3% during the second quarter of 2009 and further contract by 1% during the third quarter,” the alliance said.

However, alliance analysts “forecast growth to resume during the fourth quarter of 2009 but to be at or below 2% through the fourth quarter of 2010”.

Developing countries are likely to experience sluggish 2% growth overall during the second quarter this year, accelerating to 2.5% in the third quarter and to 3% for the fourth quarter this year and first three months of 2010, according to the forecast.

Normal economic growth generally is said to be 3-3.5%/year.

Economies in the developing world could see growth of 3.7% by the end of 2010, the alliance said, although advances will uneven.

“Developing country prospects are mixed, with China appearing to sidestep the feared ‘hard landing’ scenario, but the Indian economy slowing more than expected,” Waldman said.

“Developing and newly industrialised economies in east Asia have turned surprisingly weak, but prospects are seen as being good for modest recoveries both in economic and in manufacturing growth during 2010,” he said.

The 450 member firms of the Manufacturers Alliance are US and foreign production companies that do business internationally. They include a number of domestic and foreign chemical manufacturers.

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