The risk of global recession continues to rise, with the World Bank last week warning that "the real-side recovery is weak and business sector confidence is low". Spain, the world's 12th largest economy, provides a good example of how the problems are spreading.
Financial markets have temporarily decided that it has 'turned the corner', due to support from the European Central Bank. But in the real economy, things are getting worse, not better. As the chart shows from Spain's El Confidencial, freight transport is in a "profound crisis". Truck movements are a key indicator of economic health:
• They have fallen 33% since the pre-crisis peak (in terms of millions of kilometres driven)
• Q3 saw a 7.7% fall, which has continued into November
Even worse is data from the relatively rich Catalonian region, where the Red Cross says 28% of children now suffer from child poverty. Yet budget cutbacks means only 9% of schoolchildren get free school meals. Many of the rest go hungry.
Consumer products giant Unilever tells the same story. Its European head, Jan Zijderveld, warned back in August that "poverty is returning to Europe" and highlighted how they were successfully introducing business models from "Indonesia (where) we sell single packs shampoo for 2 to 3 cents and still make good money".
Benchmark price movements since the IeC Downturn Monitor's 2011 launch, and latest ICIS pricing comments are below:
Naphtha Europe, down 16%. "The current surplus is being sold at heavy discounts, and is being replaced by new volumes originating from Russia, as well as product from local refineries."
HDPE USA export, down 14%. "Tight supplies helped boost prices in some cases"
PTA China, down 11%. "China's polyester sales shrank further during the week and the sales-to-output ratio of Chinese polyester yarn producers waned to 30-50%, compared with last week's 50-80% and 80-120% seen in early January"
Brent crude oil, down 11%
Benzene NWE, up 10%. "Growing buying interest among suppliers ahead of a bullish February helped push current month values up as the week progressed"
S&P 500 stock market index, up 9%