“Investors retreat as deflation fears rise”

Economic growth

SHARE THIS STORY

Deflation Dec13The blog’s important eBook, ‘Boom, Gloom and the New Normal: How Ageing Western BabyBoomers are Changing Demand Patterns, Again’, was published 3 years ago this month.  Co-authored with John Richardson, it identified the major changes taking place in global and national demand patterns:

Growth accelerated from the 1980s, as the population became concentrated in the wealth creating 25 – 54 age group, and the number of dependent children reduced.

Growth then moved into SuperCycle mode as low fertility rates freed large numbers of women to re-enter the workforce after childbirth.

The past 30 years were thus an entirely exceptional period of growth in the global economy.

But the next 30 years will be quite different:

  • For the first time in history, the world has an entire generation of people aged over 55
  • And low fertility rates have created a shortage of those in their peak demand years

Growth will inevitably slow, as the relative size of the wealth creator generation will continue to reduce, due to more and more men and women joining the New Old 55+ group

This slowdown will be accentuated, as the New Old represent a replacement economy.  They already own most of what they need, and their incomes are reducing as they enter retirement

For the past 3 years, the blog has had the privilege of working with the Boards of many major companies, describing the challenges and opportunities created by these immense changes in demand patterns.  It has also spoken at a wide range of conferences around the world, as clearly these changes are having widespread impact.

But now, the time for talking and discussing is over.  Companies must instead start to turn words in action, or risk suffering a major downturn in their business over the next 5 – 10 years.

Last week, China’s President Xi Jinping highlighted that China is now moving into the New Normal:

We must boost our confidence, adapt to the New Normal condition based on the characteristics of China’s economic growth in the current phase” 

At the same time, the world’s leading financial media were reporting how developments in the global economy are following the forecasts set out in Boom, Gloom, and the New Normal:

  • The front page headline in Friday’s Financial Times was “Investors retreat as deflation fears rise
  • Reuters’ headline on the same day was “The world needs to get ready for a New Normal with Chinese characteristics
  • Whilst the Wall Street Journal wrote under the headlineGlobal Growth Worries Climb

“Five years after the financial crisis ended, soft growth in Europe, a stop-and-start U.S. recovery and waning momentum in China have policy makers groping for what to do next.”

We are now at the parting of the ways.  Global growth cannot, and will not, go back to the world of the Boomer-led SuperCycle.  The next 30 years will see a whole range of major new opportunities develop, for those companies who are willing and able to grasp them.

Our 5-step APPLY Workshops are individually tailored to meet the needs of your business.  Please click here if you would like further details of their Value Proposition.  And please click here to download your copy of ‘Boom, Gloom and the New Normal.

 

The blog’s weekly round-up of Benchmark price movements since January 2014 is below, with ICIS pricing comments:
PTA China, down 14%. “Slower demand seen in the polyester markets towards the week’s close has kept the majority of end-users adopting a rather pessimistic market outlook”
US$: yen, down 3%
Benzene, Europe, down 2%. “Spot price levels dropped this week to their lowest since the start of the year”
Brent crude oil, down 1%
Naphtha Europe, up 2%. “A potential rise in imports from Russia, coupled with the end of the US refinery maintenance season, could ease supply pressures”
S&P 500 stock market index, up 3%
HDPE US export, up 7%. “Latin American buyers were purchasing significant volumes of lower-priced material from Korea”

PREVIOUS POST

Indian auto sales decline as the middle class myth disappears

16/05/2014

India’s stock market has hit new records this week, as investors anticipat...

Learn more
NEXT POST

London house price bubble hits the record books

20/05/2014

The UK no longer leads the world in soccer, as next month’s World Cup will...

Learn more
More posts
The Fed’s stock market bubble is at risk as China bursts its real estate bubble
24/10/2021

The US stock market bubble just keeps rising. And every investor “knows” that the US Fed...

Read
EU patience starts to run out as UK threatens to break the N Ireland Protocol
17/10/2021

Unsurprisingly, it turns out that Brexit still isn’t “oven-ready”, despite the UK ...

Read
An end to the China bubble would risk a Minsky moment
05/10/2021

My letter in today’s Financial Times warning of the risk to Western financial markets from the bur...

Read
Xi aims to “bring order out of chaos” by bursting China’s property bubble
03/10/2021

China is at the start of its biggest economic shake-up since 1978, when Deng Xiaoping launched his p...

Read
Housing markets face long-term downturn as central banks abandon stimulus
05/09/2021

Last month saw the beginning of the end for the central banks’ 20-year experiment with stimulu...

Read
Businesses set for transformation as supply chain chaos combines with Net Zero targets
15/08/2021

‘Business as usual’ seems a most unlikely outcome as we look forward over the next 6 months....

Read
Auto industry provides a model for the transition to Net Zero
25/07/2021

Flooding in China and Europe, record temperatures in the USA, wild fires – all these are signs...

Read
Europe’s Green Deal will transform its economy, as floods confirm urgency of tackling climate change
18/07/2021

The floods raging in Germany and Benelux highlight the scale of the Climate Change challenge ahead....

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