Economist bullish on US, world economies

By Frank Esposito
Senior Staff Reporter

Published: March 29, 2013 2:02 pm ET
Updated: March 29, 2013 5:35 pm ET

Related to this story

Topics Materials, Materials Suppliers

HOUSTON — The world economy is heading in the right direction, according to prominent economist Nariman Behravesh.

"Is there room for more optimism?" Behravesh asked at the IHS World Petrochemical Conference, held March 20-21 in Houston. "The answer is a resounding yes."

Behravesh is chief economist for IHS Inc., a consulting giant based in Englewood, Colo. The firm's Houston-based IHS Chemical unit hosted the event.

"There are a lot of bright spots, and the U.S. is one of those bright spots in spite of scare-mongering coming out of Washington," Behravesh said. "A lot of bad things that could have happened in the last 12 months didn't happen.

"There was no fiscal cliff, no Chinese hard landing. The private U.S. economy is ignoring what's going on in Washington."

Around the world, Behravesh — ranked as one of the industry's best economic forecasters by Bloomberg News for three consecutive years (2009-11) — said that northern Europe "is doing well," even if southern Europe is in a deep recession. He identified Africa as the world's fastest or second-fastest growing region and said that economies in India and Brazil are expected to turn around after poor performances in 2012.

Behravesh tagged Chinese economic growth at 8 percent and described Japan as "one of the brightest spots" after three recessions in five years. New leadership in Japan should create growth of 2 percent this year.

He added that the U.S. economy is rebounding in spite of worries about payroll taxes, rising gasoline prices and "a dysfuctional political system."

"The U.S. has self-inflicted problems," said Behravesh, who previously hosted the PBS TV series Inside the Global Economy. "Inside the Beltway, it's a mess."

In spite of this political situation, he said the dynamics of the U.S. economy are good, with growth in both jobs and income, as well as an increase in household net worth, housing starts and home prices.

Balanced growth in China could be affected by a re-inflation of that country's real estate bubble, Behravesh warned. "There are lots of new empty apartments in China, because real estate is one of the few investments a Chinese investor can make."

These conditions should lead to global gross domestic product growth of 3.5 percent in 2013 — a full percentage point ahead of the pace of 2012, he said. In the U.S., automatic spending cuts from the government sequester could reduce U.S. GDP growth from an expected 2.1 percent to 1.6 percent if the cuts stay in place for a full year. Behravesh described those numbers as "not great, but not a recession scenario."

Behravesh credited the "gas and oil revolution" taking place in the U.S. with much of the region's growth.

"There's been a lot of hype [about oil and gas], and it's a little overblown, but it's still a very important development," he said. "It's shifted the global industrial landscape."

The U.S. has had an edge in developing oil and natural gas because of well-developed infrastucture in places like Texas, North Dakota and Pennsylvania. Private ownership of mineral rights also has been crucial, Behravesh said, allowing individuals to negotiate instead of the government. The region also has "lots of independent drillers" with access to capital and good supply chains.

"This is a story about market forces and entrepreneurship," he said. "Not about government intervention. And it happened amidst a push for green energy."

Oil and gas development could create at least 1.7 million upstream jobs and at least 1.5 million downstream ones, Behravesh added. It also could provide U.S. consumers with lower prices on many products.


Comments

Economist bullish on US, world economies

By Frank Esposito
Senior Staff Reporter

Published: March 29, 2013 2:02 pm ET
Updated: March 29, 2013 5:35 pm ET

Post Your Comments


Back to story


More stories

Unipex Group buys Ferguson Chemical Innovation

July 29, 2014 1:57 pm ET

Chemical distributor Unipex Group Inc. announced July 29 that it had purchased Ferguson Chemical Innovation, a Brampton, Ontario-based supplier of...    More

Image

Carbon black supplier Orion begins trading on NYSE

July 29, 2014 11:29 am ET

Orion Engineered Carbons S.a.r.l. has priced the initial public offering of 19.5 million common shares at a price to the public of $18 per share.    More

Image

Dow sees solid second quarter performance

July 29, 2014 11:19 am ET

Dow Chemical Co. has reported its second quarter figures, with its seventh consecutive quarter of growth, according to the company.More

Image

Evonik sells polyimide foams operation to Boyd

July 29, 2014 10:46 am ET

Modesto, Calif.-based Boyd Corp., a manufacturers of specialty material and sealing agents, has purchased Evonik Industries’...    More

Image

Formosa to be compensated for Vietnam riot

July 28, 2014 1:44 pm ET

Taiwan's Formosa Plastics Group will receive $2.39 million from the Vietnamese government and insurance companies for damages suffered during the anti...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events