Global Economy Loses Suspension

Business, China, Company Strategy, Economics, Europe, US

By John Richardson

ISN’T it interesting how when you talk to someone involved in a petrochemicals project, either publicly or privately, their project is very often sufficiently to the left of the cost curve to gain a winning advantage over competitors?

Discussions are almost entirely about feedstock advantage, production and logistics efficiency and location etc. Thus was the case at the Asia Petrochemical Industry Conference (APIC) in Kuala Lumpur, Malaysia, earlier this month.

Demand over the long term is never seen as a problem.

A reason might be that many executives have forgotten the world before the economic golden era of 1982-2007, or are too young to have experienced anything different. During those years, the global economy was buoyed by the wealth of the Babyboomer generation.

Nobody had to worry about demand during that period as, during brief recessions, it was always lurking in the background, waiting to come roaring back. All that central bankers had to do, as we discuss in our e-book, Boom, Gloom & The New Normal, was to cut interest rates to bring Western economies back to immediate economic health.

A virtuous circle also existed between strong growth in the West and in China. From 2001 onwards, following China’s accession to the World Trade Organisation, the country enjoyed enormous export-focused growth, thanks to strong demand in the West.

Increasing volatility, uncertainty, complexity and ambiguity (VUCA) in the global economy, described by fellow blogger Paul Hodges in an excellent series of posts last week, indicate that this has all changed.

In the past, it was a bit like driving a new car with good suspension. Global growth was so buoyed by demographics that we didn’t as much feel the bumps in the road caused by short-term economic events.

Now the suspension is worn-out, and needs replacing by new routes to growth, and so we notice the bumps a lot more.

Some policymakers realise things have changed – for instance, those in China who are backing economic reform.

But there are no guarantees that when policymakers recognise the challenges, and put a reform programme in place, they will succeed, as China again illustrates.

PREVIOUS POST

China PE Demand Falls Six Percent

27/05/2012

By John Richardson The 6% decline in apparent polyethylene (PE) demand in China ...

Learn more
NEXT POST

European Firms Assess China Exit

30/05/2012

By John Richardson CHINA’S rising labour costs and a worsening regulatory ...

Learn more
More posts
Focus of petchems business must be on meeting medical and food needs
05/04/2020

By John Richardson SEVERAL contacts have said to me over the last two weeks that increased medical a...

Read
Be very, very cautious about buying into the idea of a Q2 crude price rally
03/04/2020

By John Richardson IT IS the unprecedented nature of the demand shock that’s the thing, regardless...

Read
No business as usual despite re-ordering of global polyethylene competitiveness
01/04/2020

By John Richardson THERE ARE sadly no business as usual scenarios, in my view. Under normal circumst...

Read
China: temper your expectations of a H2 recovery for supply as well as demand reasons
29/03/2020

By John Richardson CHINA IS gradually getting back to work, but only gradually because the governmen...

Read
Petrochemical feedstock purchasing managers: What to think about and what do next
27/03/2020

By John Richardson ALL THE old assumptions about how oil, feedstock and petrochemicals markets work ...

Read
Vital work to maintain petrochemicals supply for essential services must continue
26/03/2020

By John Richardson INDUSTRY associations around the world are lobbying governments about the importa...

Read
Polyethylene: How to plan sensibly as we face threat of new Global Depression
25/03/2020

By John Richardson I SINCERELY want to help you guys. That’s what I am here for. To this end, here...

Read
Coronavirus may take as much as two years to be brought under control
22/03/2020

By John Richardson The only honest answer is that none of us know how events will turn out because o...

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