Outlook for 2007 and Beyond:Economy Is Growing...But Slowly

U.S. and global economies are slowing, but both should see continued if more moderate growth in the new year, say top chemical industry economists. "It is clear that the global economy remains relatively strong," economists at the American Chemistry Council said in the recent year-end economic appraisal and outlook for 2007. "Much of Western Europe has accelerated, and China, India, and many other emerging markets are growing at a strong pace, offsetting slowing growth in the U.S., Japan, and Latin America," said council chief economist Kevin Swift. While global economic growth will likely slow to a rate of 4.2 percent in 2007 — down from a 30-year record pace of 5.3 percent in 2004 and lower than this year's expected gain of 4.7 percent — the worldwide economic engine will continue to expand, Swift said. Global growth is expected to begin a modest turnaround in 2008 with what Swift anticipates will be an increase of 4.3 percent that year. "The U.S. economy is clearly losing momentum, and economic growth here will be below trend as effects of the housing slump ... affect other sectors of the economy," Swift said. However, he added, "A cooling down of U.S. economic activity is widely expected, but a recession is not." In the chemicals sector, the council said global output would likely show an improvement this year, up by 3.8 percent compared with the 3.3 percent gain seen in 2005. Both of those figures remain below the sharp 4.8 percent increase in global chemicals output seen in 2004, Swift said, but the industry likely will improve to 4 percent next year before moderating again to 3.6 percent in 2008. "Overall U.S. chemical industry growth will improve to 3.2 percent in 2007 and moderate to 2.5 percent in 2008," Swift predicted.