In 2008, the world economy was heavily impacted by the global financial crisis and its effects on the real economy. Due to the massive slump in demand for consumer and industrial goods in the fourth quarter, industrialized countries entered into a recession. Worldwide growth of gross domestic product in 2008 (+2.2%) was below both our forecast (+2.8%) and the growth trend. Since mid-2008, the chemical industry has shown no signs of growth.
The global financial crisis strongly affected the economic situation in 2008. The bankruptcy of the U.S. investment bank Lehman Brothers in the middle of September intensified the crisis of confidence in the financial sector. Furthermore, very high energy and raw material prices negatively impacted demand in the second and third quarter of 2008.
Both governments and central banks have provided a financial safety net to ensure that the financial markets can begin to function again. Additionally, interest rates were dramatically reduced. These measures, however, have only partially stabilized the financial system. The turbulences caused a crisis of confidence in the global economy. Risk premiums, credit standards and financing costs have increased.
In the third quarter, the real economic effects of the financial crisis began to weaken worldwide growth significantly. Many industrialized countries have entered into a recession – especially the United States, the United Kingdom, Spain, Germany, Italy and Japan – which intensified in the fourth quarter through the slump in industrial production. The growth of the global gross domestic product in 2008 (+2.2%) was significantly weaker than in the previous three years.
Gross Domestic Product 2008 Real change compared with the previous year
Development by regionIn Europe , since the second quarter of 2008, the economy has been in a downturn, which intensified significantly at the end of the year. The United Kingdom, Ireland and Spain have entered into a recession as a result of the real estate and financial crisis. The rest of the E.U. is also showing signs of a recession, lead by low consumer spending and a marked decline in exports. The growth of gross domestic product decreased considerably (2007: +2.8%; 2008: +1.0%).
In the second half of 2008, the United States was under pressure to adjust to the recessive real estate market and the crisis in the financial market. The slump in the construction sector and in consumption, particularly in the demand for automobiles, significantly reduced the growth of gross domestic product (+1.2%). A significant decrease in private consumption and subsequently corporate investing resulted from high interest costs, negative wealth effects, and increasing unemployment.
The growth in Asia (excluding Japan) was very strong up until the second quarter, but afterwards it could not detach itself from the global economic downturn. In particular, the ASEAN region, as well as Korea and Taiwan, were showing signs of a recession in industrial production beginning in the second quarter. This increased in the third quarter because of the economic slowdown in China. The growth of gross domestic product in Asia (excluding Japan) weakened compared with the previous year (2008: +6.7%; 2007: +8.8%).
Japan was likewise affected by the recession and only grew slightly in 2008 (+0.1%), due to its considerable dependence on U.S. and E.U. markets.
In South America the previously strong regional growth declined (+5.0%). The drop in raw material prices in the second half of 2008 especially impacted the export oriented raw material industry.
TRENDS IN THE GLOBAL ECONOMY 2008
- Growth of worldwide gross domestic product (+2.2%) significantly below the forecast (+2.8%)
- Strong impact on the world economy in 2008 from the financial crisis and very high raw material prices
- No growth impulse for the chemical industry since mid-2008