Corrected: US recession risk rises to 50% – chem group economist

15 September 2011 23:45  [Source: ICIS news]

Correction: In the ICIS news story headlined "US recession risk rises to 50% – chem group economist" dated 15 September 2011, please read in the sixth paragraph …The figure is below the 2.5% growth projected… instead of …The figure is half of the 3.4% growth projected…. A corrected story follows.

BOSTON (ICIS)--The risk of a US economic recession has risen to 50%, an economist at the American Chemistry Council (ACC) said on Thursday.

“Our 2011 outlook has been downgraded, and we now project a one-in-two chance of a recession in the US,” said Martha Gilchrist Moore, senior director of policy analysis and economics at the ACC.

“Uncertainty is weighing heavily on individuals, households and businesses,” she added.

The risk of recession in the US is up from a projection of a one-in-three chance indicated by Moore on 9 August. That was up from 25% in July.

Moore spoke at the 4th ICIS World Chemical Purchasing Summit in Boston, Massachusetts, US.

The ACC’s base case for US GDP remains positive at projected growth of 1.7% in 2011. The figure is below the 2.5%  growth projected for 2011 earlier in the year.

Moore cited negative factors such as high unemployment levels and a housing market that has yet to recover in the US, as well as the debt crisis in Greece and potential contagion in the eurozone.

In addition, many are worried about a “hard landing” in China, she noted, referring to a scenario where China’s attempts to limit inflation severely slows down its economy.

“Global expansion is stalling and the risk of global recession is rising,” Moore said.

Debt concerns in developed countries in Europe, as well as Japan and the US, “have the potential to constrain economies for a number of years”, she added.

However, the ACC’s base case for global production of chemicals calls for growth of 4.3% in 2011 followed by growth of 5.0% in 2012.

“Regionally, the strongest gains will be in emerging Asia – in particular China – but also emerging Europe,” said Moore.

The synthetic rubber segment has shown strong growth globally, with particular strength in demand for tyres for mining, she said.

Paul Hodges discusses key influencers on the economy in his Chemicals and the Economy blog

By: Joseph Chang
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