Archive | Economic growth RSS feed for this section

fool.bmp

The April Fools Day rally

There is an extraordinary main feature in this week’s Barron’s, the leading US investment magazine. This analyses the dramatic 391 point rally in the Dow Jones Industrials Index on 1 April. It describes this as ‘a spectacular exercise in the absurd’, and claims that the root cause was an April Fools spoof sent out that […]

Continue Reading

Credit crisis losses could reach $1 trillion – IMF

Last week the IMF warned there was a 25% chance of a global recession in 2008. Today, it said that the ‘crisis (was) creating serious macroeconomic feedback effects’ and could have ‘profound financial system and macroeconomic implications’. We normally expect central bankers to weigh their words carefully. But now the IMF has decided to throw […]

Continue Reading

The vicious circle

Paul Tucker of the Bank of England has consistently warned about the dangers posed by the credit crunch to the global economy. Back in December, he identified the key issue as being that central bankers ‘must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit […]

Continue Reading

Contingency planning for a global downturn

If you would like to read my article in this week’s ICB, on the importance of contingency planning, please click this link

Continue Reading

Shell, BASF, ACC warn on US downturn

‘The sharp drop in housing starts and the developing credit crisis will flow into the cracker business’, according to Shell Chemical’s CEO Stacy Methvin. She added that ‘the housing crisis is more far-reaching than anyone anticipated’. Similarly, BASF is now more cautious about the potential impact of the US recession on its petchem business. Peter […]

Continue Reading

US auto sales fall again in Q1

Car sales are of major importance to the chemical industry. The ACC calculates each new car uses $2441 worth of chemistry. The declines reported below for March and Q1 do not, therefore, make pretty reading. March Q1 GM -13% -11% Toyota -3% -4% Ford -14% -9% Chrysler -19% -16% Even more discouraging is that none […]

Continue Reading

IMF expects low growth, high inflation

The IMF now sees a 25% chance of a world recession this year, in which global growth would fall below 3%. Its base forecast is just 3.7%, compared to 5.2% before the credit crunch began. Sales growth for most chemicals is tied to GDP growth, so companies should expect volumes to come under pressure as […]

Continue Reading
currencymar08.bmp

Current account deficits start to matter

The US Fed’s decision to keep cutting interest rates is causing a major change in Asian investment behaviour. This will slow world economic growth quite significantly, and is bad news for chemical industry sales. It also means that the informal Bretton Woods II system of currency management has broken down.

Continue Reading

Shanghai stock market crashes

China is well worth watching at the moment. Quietly, away from the headlines, the Shanghai stock exchange has been collapsing. It is now down 44% since its October peak, and fell over 5% on Wednesday. This matters to the chemical industry for two reasons: • The immediate cause of Wednesday’s fall was news that Sinopec […]

Continue Reading

‘Too big to rescue’

Readers will know that I am a great admirer of Gillian Tett’s analyses of banking issues in the Financial Times. Today, she has another thought-provoking article, this time on the emergence of Iceland as ‘the world’s first country run like a hedge fund’. The article is worth reading in itself, but also for the question […]

Continue Reading