‘Don’t panic’ say Dow, BASF

Its not normally a good sign when chemical industry bosses feel the need to cheerlead on the outlook for the economy.

Dow’s CEO Andrew Liveris therefore caught my attention at Davos, when he told CNBC that talk of recession was ‘over-reaction’. Particularly when he then corrected himself, adding that what he had meant to say was ‘I won’t say there won’t be a recession – but there’s an over-reaction’.

This week, BASF Chairman Jürgen Hambrecht has taken up the role of cheerleader. Interviewed by the Financial Times, he revealed that he was ‘sleeping well at night.’ He conceded that in some industries related to housing and the consumer there was ‘a little bit of inflection’ from credit problems. But overall he was serenely confident, adding ‘why should there be a big, big crisis? I can’t see this happening’.

Unfortunately, his compatriot Peer Steinbrück, the German finance minister, was less upbeat over the weekend. Speaking after the G7 finance meeting in Tokyo, Steinbrück said the ‘G7 now thought subprime losses could reach $400bn’. This is quite an increase from the original $50bn estimate made by the US Fed. It also implies $280bn of write-offs are still to come, as total losses revealed to date are ‘only’ $120bn.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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