09 August 2012 15:50 [Source: ICIS news]
LONDON (ICIS)--The CEO of US-based Dow Chemical suggested on Thursday that 2013 could mark the “beginning of a nascent recovery”.
Speaking at a breakfast meeting, Andrew Liveris said that although there was a “fairly negative outlook”, various factors – particularly signs of improvement in the Chinese economy – could offer a little more positivity by the end of the year.
“I think the Chinese economy at single-digit growth is still a good growth engine. It’s just that right now they’re transitioning. They gave a pretty good sight of that in March and told us they were moving into a paradigm of creating a social safety net of social reforms,” he said.
“These reforms are going to be a very different type of economic model than those they’ve been living with for the past 30 years, which is an export-led model. So creating a domestic sector, releasing the savings rate, creating insurance, pension and healthcare systems – it’s a transition that is going to take some time," he added.
“Of course, they don’t like what’s happening with Europe – it’s 19% of their exports. As a consequence of that they have begun a stimulus again in the investment side. I think in the back half of this year the Chinese economy will be back in its normal place,” said Liveris.
“If Europe and Germany stays where it is and doesn’t degrade further, and the US stays where it is, then 2013 could be pretty much the beginning of a nascent recovery,” he added.
During an earnings conference call on 26 July, the Dow CEO had suggested that normal economic growth would be unlikely for up to two years. He said that the crisis in Europe had spread throughout the various regions.
“We said 12–24 months in our recent outlook,” said Liveris. “What that means is we’re bracing ourselves for it not to be like what I’ve just described. We’re basically saying that this is a world full of uncertainty, capital is a coward and all of us are retreating and that’s not good. If business starts to retreat further, you’ve got a self-fulfilling prophecy in countries such as Germany and the US.”
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