Chemical Industry Bounces Back

Positive outlook should last through 2012 with emerging nations posting strongest gains.

By Thomas K. Swift, American Chemistry Council

Share Print Related RSS
Page 1 of 3 « Prev 1 | 2 | 3 View on one page

The global economy clearly has emerged from the deepest recession since the Great Depression and a recovery has evolved into expansion in much of world, especially in developing countries. For the United States, however, a boost from inventory restocking has played out and underlying demand remains weak. The housing sector, which precipitated the downturn, continues to struggle as foreclosures mount and high unemployment persists. The slow U.S. economic growth to date hasn't generated jobs for most of the 8 million put out of work since the beginning of the recession in December 2007. Gross domestic product (GDP) remains below its past peak and should increase at a subdued pace compared to rates typical at this point in a recovery. Consumer spending, traditionally an engine of growth, should rise slowly as payroll growth lingers and consumer behavior remains cautious. Business investment should be a driver. The recovery is fragile; multiple risks remain and the wrong trade, tax and other policy initiatives could derail activity.

With the exception of building and construction, most major end-use markets for chemicals have recovered — some quite strongly. The manufacturing sector, which is the largest consumer of chemicals, rebounded robustly during the 1st half of 2010 but growth has slowed following the end of the inventory rebuild. This sector remains well below its past peak. With consumers still cautious and incomes constrained by unemployment, retail sales have softened, though; production of durable consumer goods, e.g., appliances and furniture, has moderated. Light vehicle production, which fell sharply during the recession, has come back strongly and continues to expand — vehicle sales should rise in 2011 and 2012. Housing markets, however, still need additional time to fully repair and recovery isn't expected until 2012.

THE GLOBAL CONTEXT
The worldwide recovery continues to advance, especially in developing countries. Global trade has rebounded sharply from the steep drop in 2009 and should expand significantly in 2011 and 2012 (Figure 1). In the developed countries consumer and government austerity constrain growth; demographic factors also pose obstacles to long-term economic growth there. Growth in emerging markets, however, continues robust and will underpin economic developments during the next 10 years. Fears of sovereign debt crises and asset bubbles have dampened expectations.

During 2010, trends in the global business of chemistry paralleled those in broader industry. Overall activity in the $3.43-trillion worldwide chemicals sector improved about 9% in 2010 as the global economic recovery extended into its second year. After a trough was reached in March 2009, a sharp V-shaped recovery ensued. This was particularly the case in China and elsewhere in East Asia. Virtually every nation and region now has experienced recovery. Demand upswings continued in North America, Europe and Japan while emerging markets sustained strong momentum. At the global level, production volumes exceeded their previous peak in 4th quarter 2009, and the recovery evolved into an expansion (Figure 2).

Page 1 of 3 « Prev 1 | 2 | 3 View on one page
Share Print Reprints Permissions

What are your comments?

You cannot post comments until you have logged in. Login Here.

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments