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

McCann expanding in Ohio

December 17, 2014 11:59 am ET

Compounding firm McCann Plastics will spend $1.2 million on an expansion project that will create 15 new jobs at its plant in Green, Ohio.    More

French firm acquires Zimmer-brand polymer technology

December 15, 2014 4:18 pm ET

The deal includes technologies for the processing of polyesters and nylons, and approximately 40 researchers and engineers.    More

Image

Bioplastics global production capacity

December 15, 2014 10:14 am ET

   More

Image

Israeli compounder building $13.1 million facility in North Carolina

December 12, 2014 1:14 pm ET

Tosaf USA, a subsidiary of Kfar Yona, Israel-based Tosaf Compounds Ltd., will build a compounding and masterbatch production facility in North...    More

Image

PPS resin maker Lumena cuts production after ‘difficulties’ with banks

December 12, 2014 11:47 am ET

Polyphenylene sulfide resin maker China Lumena New Materials Corp. said it’s having difficulty “maintaining the continual support” o...    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

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

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events