IMF expects low growth, high inflation

Currencies, Economic growth, Financial Events, Leverage, Oil markets

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 global growth slows.
Last September, Rodrigo Rato, then head of the IMF,was one of the first central bankers to acknowledge that there was ‘a serious crisis’ and that ‘systemically important banks may face constraints in extending credit.’ This forecast has since proved totally correct. Not only has Bear Stearns been bailed out in the US, but today HSBC, one of the world’s largest banks, has announced it can no longer offer home mortgages to new UK customers.

Now the IMF says that the US is facing ‘the largest financial crisis since the Great Depression’. It expects only 0.5% GDP growth in the US this year, and just 0.6% in 2009. Europe is also slowing, with growth expected to be 1.3% this year. Japan will only grow 1.4%, and China is expected to slip to 9.3%. It also expects further US$ devaluation, commenting that the US$ remains ‘strong relative to fundamentals’.

In addition, policy makers see inflation remaining too high for comfort in energy and food. Both the Asian Development Bank and the World Bank have warned this week that Asian central banks will need to ‘purse policies to quell inflation rather than spur economic growth’. Against this background, chemical companies need to develop contingency plans that will enable them to cope with the difficult times that may lie ahead.

PREVIOUS POST

Current account deficits start to matter

31/03/2008

The IMF now sees a 25% chance of a world recession this year, in which global gr...

Learn more
NEXT POST

US auto sales fall again in Q1

03/04/2008

The IMF now sees a 25% chance of a world recession this year, in which global gr...

Learn more
More posts
Chart of the Year – China’s shadow banking collapse means deflation may be round the corner
16/12/2018

Last year it was Bitcoin, in 2016 it was the near-doubling in US 10-year interest rates, and in 2015...

Read
BASF’s second profit warning highlights scale of the downturn now underway
09/12/2018

The chemical industry is easily the best leading indicator for the global economy.  And thanks to K...

Read
Chemistry & the Economy: 2019 Outlook
04/12/2018

There will be no shortage of important topics to discuss on Thursday, at my regular Chemistry and th...

Read
Brexit moves from ‘Snakes and Ladders’ to cricket
02/12/2018

The Brexit debate had appeared to be a simple game of Snakes & Ladders till now.  The Leave cam...

Read
Asian downturn worsens, bringing global recession nearer
25/11/2018

The chemical industry is the best leading indicator for the global economy.  And my visit to Singap...

Read
Your ‘A-Z Guide’ to the Brexit Negotiations
18/11/2018

“The UK is now facing a national crisis”, according to Margaret Thatcher’s former ...

Read
Chemical output signals trouble for global economy
04/11/2018

A petrochemical plant on the outskirts of Shanghai. Chinese chemical industry production has been ne...

Read
Budgeting for the end of “Business as Usual”
28/10/2018

Companies and investors are starting to finalise their plans for the coming year.  Many are assumin...

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