Global economy faces difficult 2013

ACC OR% Dec12.pngIts now 4 years since the blog published its first New Year Outlook in ICB. Then it was in a small minority when advising CEOs “to prepare for a marathon not a sprint” in dealing with the financial crisis. And very few accepted its suggestion that it was “unlikely that governments will quickly find a ‘magic bullet’ to quickly correct the causes of today’s problems“.

Today, of course, these views have now become mainstream.

However, there is still a widespread failure to link today’s ongoing economic turmoil to the major demographic changes now underway. This has two serious results:

• Policymakers, though well-meaning, are pursuing policies which make the underlying situation worse, not better – by unintentionally causing oil prices to remain at record levels, for example
• Companies have been slow to appreciate the new sources of growth that are developing. Thus even today, very few have begun to produce products and services for the New Old 55+ generation – although these now number around 300 million in the West alone

The result is shown in the chart above from the American Chemistry Council. Global operating rates were just 85.8% in November, down from 86.4% in November 2011. They are well below the long-term average of 91.2%, and the trend is now downwards again.

A New Year is often a time for new directions. The blog’s 2013 New Year Outlook thus provides a high-level analysis of the major opportunities that now exist to sustain profitable growth over the next decades. It argues that “technical and business model innovation are now essential, if companies are to profit from the two major growth markets now starting to dominate Western and emerging economies“.

Please click here to download a free copy of the Outlook.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. 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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