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“A real global downturn in the industrial sector”

Chemical companies, Consumer demand, Economic growth
By Paul Hodges on 28-Jul-2010

ECRI Jul10.pngThere are mounting signs that 2010 could prove a Year of 2 Halves in terms of economic growth.

Interviewed by Bloomberg last month, the MD of the Economic Cycle Research Institute (ECRI), Lakshman Achuthan, warned that their indicators showed “A real global downturn in the industrial sector is starting right here and right now“. They saw Chinese exports looking particularly weak in H2, closely followed by industrial production.

Now the ECRI Index for the USA (above) is clearly forecasting a renewed downturn, with a reading of -10.5. As Dave Rosenberg of Gluskin Sieff notes, “its never been here before without there being a recession“. And the indicator itself is very credible, having only once produced a false forecast in the past 40 years.

Whilst their colleagues head for the beach and a well-deserved summer break, prudent CFOs will be developing their contingency plans to ensure H1’s gains are not lost during any H2 downturn.