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- Shale Gas Investments and Rebounding Emerging Markets to Drive Future Growth -

WASHINGTON, D.C. (July 5, 2012) - Following a strong fourth quarter in 2011, the U.S. economy started 2012 on firm ground with gains in consumer spending, manufacturing output and housing. Those positive gains appear to be eroding, according to the American Chemistry Council's (ACC) Mid-Year 2012 Situation and Outlook , released today.

The report finds that first and second quarter 2012 growth was weak and that underlying drivers will constrain growth for the remainder of the year."

Turning to the business of chemistry, the financial crisis in Europe and slowdown in China and other emerging economies continue to take a toll on demand for U.S. exports. This outlook, coupled with weakness in U.S. manufacturing will likely produce muted demand for chemical products in the second half of 2012. Overall, American chemistry output is anticipated to rise by 0.5% in 2012, before accelerating to a 2.3% growth rate in 2013.

Despite a weakened outlook for GDP growth, global chemistry continues to advance, with expectations for output of chemicals in emerging markets to outpace production in developed countries. China will continue to grow strongly, but at a slower pace than the previous decade. India, Africa, Latin America and other emerging markets will continue to expand, with the strongest growth in 2012 expected in specialty chemicals, consumer products, and agricultural chemicals. Overall, output is expected to grow by 2.3% in 2012, 4.3% in 2013, and 4.7% in 2014.

Outlook for 2012/2013

The outlook for the rest of the year is for slow growth with improvements in investment spending and residential investment as the bright spots. Lower energy prices will support modest gains in consumer spending and help to offset the effects of high unemployment and low wage growth that are constraining incomes. The consensus forecast for U.S. GDP is for continued growth, expanding by 2.2% in 2012 and 2.4% in 2013. The recovery remains fragile with multiple risks on the horizon and the wrong trade, tax or other policy initiatives could derail activity. In the chemical industry, strong gains in capital spending by American chemistry are expected during the next several years, the result of announced new investment in petrochemicals and derivatives arising from shale gas developments . Capital spending in the business of chemistry will reach $35.5 billion in 2012 and will steadily rise to $51.5 billion in 2017.

Looking further ahead with an eventual resolution in Europe and rebounding growth in emerging markets, ACC expects growth in chemistry to accelerate in the coming years, growing faster than U.S. GDP.

For more information on the way in which chemistry impacts the wider U.S. economy, and to see how the study of chemistry can help anticipate peaks and troughs in the overall U.S. economy, go to .

The Mid-Year 2012 Situation & Outlook is available for $200 and includes a year-end report published in December. To order or download an electronic version, visit or call (301) 617-7824.


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