Chem executives see US fiscal cliff as a big worry – survey

19 December 2012 18:12  [Source: ICIS news]

HOUSTON (ICIS)--Many chemical industry executives see the ongoing fiscal cliff deadlock in the US as a major concern, auditing firm KPMG said on Wednesday, citing the results of a survey.

The so-called fiscal cliff is a combination of automatic income tax increases and cuts in federal government spending that will kick in on 1 January, unless Congress and the White House can agree on terms to lessen the blow.

KPMG said that 41% of executives polled indicated that in the current macro-economic environment, their biggest concern is the US fiscal cliff. An additional 20% pointed to a slowdown in emerging markets and 19% cited eurozone debt issues.

"The threat of the fiscal cliff is an obvious concern, leading many companies to focus on improving business effectiveness and maintaining a strong balance sheet," said Mike Shannon, global chairman of KPMG's Chemicals and Performance Technologies practice.

"Companies that are successful in these endeavours can gain a competitive advantage and be better positioned to capitalise if the economic tide turns," Shannon added.

However, despite near-term economic challenges, executives expect that the US chemicals industry will continue to see strong growth as a result of shale gas developments, KPMG said.

Nearly one-third of executives surveyed said that shale gas developments in the US will drive significant growth in petrochemical and downstream manufacturing.

Additionally, 37% said that US shale exports will force increased competition, leading to price and margin erosion in Asia, KPMG added.

The KPMG survey results reflect responses from 87 senior chemical industry executives who self-selected to participate in the survey.

Earlier this month Dow Chemical CEO Andrew Liveris said he was optimistic about a positive resolution to the US fiscal cliff and that his company was not feeling any major impact so far.

Additional reporting by Joe Kamalick in Washington and Joseph Chang in New York

By: Stefan Baumgarten
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