The world will not see normal economic growth for 12-24 months because the crisis in Europe has spread to much of the planet, the chief executive of Dow Chemical said on Thursday.
"The new reality is that this world is not in a normal growth mode, and it does not appear that we will see this for at least 12-24 months," said Andrew Liveris, Dow chief executive. "The global GDP will struggle to get close to 3% in the next 12-24 months on a sustained basis."
Liveris made his comments during an earnings conference call.
This pessimistic forecast is a change from earlier this year, when Dow Chemical expected demand to grow in the second half of 2012.
However, Dow changed its outlook as the economic problems in southern Europe spread to Germany, the region's largest economy, Liveris said.
"German consumer sentiment, German buying behaviour and German exports were all going downwards. That really hasn't reversed itself yet," Liveris said.
Now the slowdown in Europe is dragging down China, which relies on the eurozone for 19% of its exports, he said.
"That combination and the spill-over effect into the rest of Asia, and for that matter, Brazil and the emerging world – that is what we saw through the quarter," Liveris said.
China's economy will likely linger at the current level of growth until stimulus programmes begin to boost domestic growth in investment and consumption, he said.
However, China's economy will not quickly snap back, Liveris said.
"It will be a late-this-year-type reversal to get their growth rates back into the 8% range that they need to have," he said. "They are probably running at very low numbers right now, a 3, 4, 5% number at best."
Meanwhile, the US economy is contending with moderating growth in consumer confidence, he said. Consumer confidence is being held back by high unemployment, uncertainty in Europe and a slowdown in exports.