SABIC unveils 'Global Economic Confidence Index': Covid-19 is likely to become the biggest black swan event to impact the global economy in recorded history

Published: 20 April 2020 - 2 a.m.
By: Martin Menachery
SABIC recently conducted an online launch of the 'Global Economic Confidence Index Amid the Pandemic' in collaboration with Caijing Magazine and Caijing Think Tank. The launch featured eight prominent leaders from industry and academia discussing the results of surveys initiated by SABIC and Caijing: '2020 Global Economic Confidence Index' and '2020 Energy & Chemical Industry Forward-Looking Indicator'. During the event, they also shared insights on risks, prospects and solutions for the global and Chinese economies amid the fallout of the Covid-19 pandemic.

The eight top leaders involved were Li Lei, vice president and regional head, North Asia, SABIC; Zhu Min, president of the National Institute of Finance Research (NIFR) of Tsinghua University and former vice president of IMF; Fu Chengyu, professor of management practice of governance and innovation at large corporations at the Cheung Kong Graduate School of Business and former chairman of Sinopec; Li Yang, academician of the Chinese Academy of Social Sciences and chairman of the National Institution for Finance & Development; Yao Yang, dean of the National School of Development (NSD) of Peking University; Zhang Yansheng, principal researcher of the China Center for International Economic Exchanges (CCIEE); Liu Yuanchun, vice president of Renmin University of China; and Li Xunlei, chief economist of Zhongtai Securities Company Limited.

According to Li Lei, while there is enormous pressure on 2020s global economic confidence, the chemical industry is expected to maintain a generally healthy standing over the long term. "This unprecedented global pandemic comes as an unexpected factor resulting from the increased global connectivity that we have fostered together over the years. It would be prudent for the global community to lean into collaboration and further strengthen the positive aspects of our existing drive towards globalisation. Mankind shares a common future and we should work together to strive for mutually beneficial prosperity," Lei said.

SABIC has been working with Caijing Magazine and Caijing Think Tank over the past three months, consulting world-renowned economists and top minds in the governments, business and finance on their perspectives and confidence level regarding the global economy. In addition, to better understand the prospects of important vertical industries and trends in the macro economy, this year’s survey selected the energy and chemical industries as its special focus, as they are fundamental for China’s economy. It then carried out designated research together with authoritative institutions such as China Petroleum and Chemical Industry Federation (CPCIF).

Key findings: (i) Covid-19 is likely to become the biggest black swan event to impact the global economy in recorded history and the current 10-year global economic expansion is likely to come to an end. (ii) Sharply decreased demand will put significant pressure on the growth of China's economy. (iii) Compared with investment and export, consumption will play a more prominent role as the driver of economic growth and will hedge against the impact of the pandemic. (iv) Initial trends of decentralised and multi-centralised global industrial chains have emerged, posing new threats to China’s position as the world factory and its ambitions of economic transformation.

In addition to the newly released survey results, SABIC continues to actively participate in key thought leadership events such as Boao Forum for Asia (BFA) and the China Development Forum (CDF). As a long-term inclusive growth partner for China, SABIC is committed to expanding its investment in the country. Today, SABIC has a state-of-the-art SABIC Technology Center in Shanghai, three plants based in Shanghai, Guangzhou and Chongqing, a joint venture with Sinopec: SINOPEC SABIC Tianjin Petrochemical Co Ltd (SSTPC), running a world-class petrochemical complex in Tianjin, and operations in 14 cities across Greater China.

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