Weak global demand is felt in Asia, Europe and America

global demand

The 500 Table survey by Spanish insurance firm Crédito y Caución, which includes about five hundred detailed performance forecasts of 14 sectors in 34 markets, registered in February a general worsening of the economic activity.

Spain recorded an improvement for the chemical sector, which was updated to “favourable”. This sector is expected to grow 5% in 2013 driven by the internationalisation and pharmaceutical business opportunities, which have increased by reducing costs. By contrast, the outlook for the metallurgical is the most negative on the scale, pressured by limited domestic demand.

This loss is framed within a global phenomenon that affects three very cyclical sectors that also are interlinked: Machinery, Metallurgy and Steel. In Europe, Slovakia recorded declines in all three perspectives and the Czech Republic in two of them because of the weakness of economic growth.

The data is also worsening in Asia, especially on steel: the outlook is as “unfavourable” as in Indonesia, Singapore and Japan. The last two Asian markets suffered a sharp drop in domestic demand. Indonesia still has a robust domestic demand, but local companies are facing strong pressure from globalisation, which is making imports cheaper, in an environment of global production overcapacity. This phenomenon has also affected the steel sector of the United States.

Another sector on the downward trend is construction, with falls recorded in Turkey and the United States.

Portugal recorded improvements in chemicals and durables, both perspectives “favourable”, linked to its exports capacity. On the other hand, the prospects for textile went down to the bottom of the list after suffering a clear deterioration in payment behaviour in an environment of growing global competition.

A more positive note was brought by Russia and Thailand. Russia registers improving forecasts in agriculture, driven by growth in grain prices, and food, with both perspectives “favourable”. Thailand recorded improvements in agriculture and automotive, with forecasts “good” and “excellent” respectively, linked to government assistance programmes. The services sector also improved to “good” prospects driven by the evolution of tourism and increasing consumer confidence.

“The value of these forecasts is that they have been made by risk analysts who value the risk directly associated with the companies in each market,” Crédito y Caución said in a press release.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

Be the first to comment on "Weak global demand is felt in Asia, Europe and America"

Leave a comment