What’s it like to be a millionaire?

Business, Company Strategy, Economics, India, Indonesia, Philippines

P1010121.jpg

….You might have to be to be able to afford this lot in a few years time (at least in some inflation-battered and collapsed local currency)

Thanks to Mark Berggren of MMSA for pointing out this wonderful quote: “Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries”
Douglas Casey, Classmate of Bill Clinton at Georgetown University

The tremendous economic boom of 2000-2007 in emerging markets might have also left millions more behind than had been previously thought as increased wealth from local prosperity – rather than from stealing foreign aid – has ended up in the hands of the middle classes.

Two new studies – one by the Asian Development Bank and the other by the World Bank – have raised the bar on definitions of poverty, largely as a result of rising food costs.

For example, the ADB believes that there are 20.1% more people in poverty in Indonesia and 15.9% more poor people in the Phillipines than it had previously thought.

The great petrochemical hope in the sky has been India, but how can a country with terrible infrastructure, poor irrigation and very low literacy rates ever give the majority of its people the joyous pleasure of buying plastic bags? The World Bank estimates that 455 million people have to get by in India on $1.35 or less a day.

The point here is that inflation will eat into all the rosy forecasts for petrochemical demand growth that were around as recently as the first quarter of this year.

How long-lasting will the damage be to growth? The answer could be how long oil prices remain elevated which comes back to your view on supply and demand.

Surging oil prices on the well-documented supply problems are big factor behind rising food costs. This is either directly through higher transportation and fertiliser bills or indirectly through the nonsense of first-generation biofuels industry in the West taking away land from food production. Plus you have the problem of all those newly middle class people in countries such as India eating more meat.

I don’t think the recent fall in crude prices changes anything. This is just a temporary correction based on weaker demand growth. When there’s an economic recovery, the supply shortage could quickly result in another downturn – hence, constant volatility above a high price floor.

I wish had bought shares in agrochemical companies a few years ago.

PREVIOUS POST

Get off your backside!

04/09/2008

climate change, Energy Carta, NUS, Project Better Place, Conergy

Learn more
NEXT POST

The ultimate consumption tax

09/09/2008

Alabama, obesity, living beyond our means, fat tax

Learn more
More posts
Rate of recovery hugely reliant on effectiveness of government policies
24/09/2020

By John Richardson UNLESS MORE action is taken by developed countries to help counter the impact of ...

Read
China bans on single-use plastics move forward with major recycling investments likely
22/09/2020

By John Richardson THIS EVENT slipped under most people’s radar in the midst of the pandemic crisi...

Read
Developing world polymers demand unlikely to see quick rebound
20/09/2020

By John Richardson THIS IS a tragedy in the genuine sense of the word, not just in the so-often misu...

Read
China’s policy dilemma: raising local demand while protecting exports
13/09/2020

  By John Richardson IN THIS Western-centric world, a huge amount of ink is split over the cons...

Read
China’s polyethylene demand good so far in 2020 but beware of risks ahead
10/09/2020

Note that all the comparisons in this post are on a year-on-year basis unless otherwise stated By Jo...

Read
Ah, I see: China’s booming demand mystery a little closer to being solved
08/09/2020

  Note that all the data comparisons below are on a year-on-year basis By John Richardson THE P...

Read
The China polyester mystery continues in a world turned upside down
07/09/2020

By John Richardson SOMETHING very strange is happening in China’s polyester industry which has eno...

Read
China will struggle to boost local retail sales during rest of 2020 with export outlook uncertain
04/09/2020

By John Richardson IF IT were easy, then there would be an oversupply of owners of large yachts in M...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more