Global GDP saw record fall in 2015 – new IMF data

Consumer demand

SHARE THIS STORY

GDP Apr16

New data from the International Monetary Fund confirms that last year’s collapse in global GDP was even worse than first reported.

As the chart shows,the fall when measured in current dollars was a record $4.7tn, versus $3.3tn in 2009.  And GDP was down 6% in percentage terms versus 5.3% in 2009:

  • Even more worrying is that the IMF have now revised down their 2016 outlook
  • They now expects GDP this year to be just $0.8tn higher than in 2015 – only 1% higher
  • And they don’t now expect GDP to recover to the 2014 level until 2018 at the earliest

This highlights the headwinds now hitting the economy as we arive at the “demographic cliff“.  The World Bank’s country director for Indonesia, Rodrigo Chaves, noted this week:

No country becomes rich after it gets old.  The rate at which you grow [with] a whole bunch of old people on your back is much lower than the rate of growth at which you can grow when people are active, are educated, are healthy.

This is simple common sense, of course.  But the IMF and most policymakers still refuse to accept the obvious conclusion – that an ageing global population cannot possibly grow at the same rate, as when everyone was in the peak Wealth Creator 25 – 54 age group.  The problem with their obstinacy is two-fold:

  • It means they persist in adding more stimulus, arguing that this will quickly “flush the blockages”
  • It also means companies are encouraged to invest in extra capacity, for which there is no market

That is why the US is now spending $164bn on building new shale gas-based petrochemical capacity.  Producers were assured by policymakers that growth would return to previous levels.  So they felt they did not need to obtain binding “letters of intent” from potential customers.  The result, sadly, is that next year will likely see major over-capacity.

It is not too late to rescue the situation.  It just needs companies and investors to abandon their reliance on policymakers’ guidance.  It is 8 years since the Crisis began, and clearly their policies have failed to produce the promised results.  Instead, we all have to focus on developing new areas of growth, as I discussed on Friday.

The critical issue is that we have now returned to the demand-led markets that predominated before the SuperCycle.  So we need to focus on finding new customers, and on helping existing customers to grow their demand.  This will require greater resources – technical and commercial – to be successful.

But doing nothing, and hoping that everything will somehow turn out alright, is becoming a certain recipe for major pain in the future as demand continues to disappoint.

PREVIOUS POST

Oil market rally under threat as Doha meeting fails to agree

18/04/2016

Yesterday’s failure of the Doha oil producers meeting will hopefully reint...

Learn more
NEXT POST

Brazil's PE market shifts from import to export as recession bites

22/04/2016

4 years ago, Brazil’s polyethylene market flagged up the first warning sig...

Learn more
More posts
Smartphone sales continue their decline, whilst $25 smart feature phones open up new markets
04/08/2019

Global smartphone sales have now been falling for 8 consecutive quarters, since Q3 2017. They are no...

Read
Smartphone market decline begins to impact global stock markets
19/05/2019

The bad news continues for the world’s smartphone manufacturers and their suppliers.  And Pre...

Read
There’s a great future for the European plastics industry in recycled plastic
05/05/2019

Europe’s plastics industry is under major threat from the growing legislative and consumer bac...

Read
$60bn opportunity opens up for plastics industry as need to eliminate single-use packaging grows
17/03/2019

150 businesses representing over 20% of the global plastic packaging market have now agreed to start...

Read
IKEA heads into the circular world with furniture subscription trial
10/02/2019

“Once upon a time, Granny and Grandad used to go to a large shop on the motorway to buy their ...

Read
Fed’s magic money tree hopes to overcome smartphone sales downturn and global recession risk
03/02/2019

Last November, I wrote one of my “most-read posts”, titled Global smartphone recession ...

Read
Global smartphone recession confirms consumer downturn
11/11/2018

Q3 smartphone sales data show the global market in recession, as Strategy Analytics confirmed: “Th...

Read
Trump’s auto trade war adds to US demographic and debt headwinds
06/08/2018

President Trump’s auto trade tariffs are bad news for the US and global auto industry, as the ...

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