Furthermore, with slower global economic growth in the years ahead due to the U.S. consumer saving spree, worldwide financial deleveragings, low commodity prices, increased government regulation and protectionism,
excess global capacity will probably be a chronic problem.
Certainly at the heart of the problem is China's out - sized contribution to
excess global capacity, which neutralizes the productivity gains documented in the WaPo piece (excess capacity is roughly unutilized production).
Not exact matches
China's
excess industrial
capacity will have a «corrosive» impact on its future growth and efficiency unless it is reduced, U.S. Treasury Secretary Jack Lew said on Sunday, adding that it was also causing distortions in
global markets.
Other reasons cited were a slowdown in technological innovation (8 percent), demographic changes (8 percent), consumer retrenchment following the Great Recession (4 percent) and
excess global production
capacity (4 percent).
While some companies Far Eastern is looking at have to deal with the
excess capacity, others need management changes to adapt to a
global market, he said, adding that companies broadly need to evolve as technology advances, he said.
The EU is also seeking to address the Chinese subsidies and dumping practices in other multilateral fora — such as the OECD's
Global Forum on Steel
Excess Capacity.
Risks associated with investing in Industrials include the possibility of a worsening in the
global economy, acquisition integration risk, operational issues, failure to introduce to market new and innovative products, further weakening in the oil market, potential price wars due to any
excesses industry
capacity, and a sustained rise in the dollar relative to other currencies.
Monetary policy is constrained and with
global excess capacity, public investment is less likely to crowd out private investment.
The recent
global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption.
On the other hand, the non-bank credit avalanche has enabled a furious pace of fixed investment in physical assets that has promoted structural
global excess capacity in virtually all manufactured products and exerted downward pressure on product prices.
There are painful factory closures — like the aluminium smelter in Northumberland, caused by
excess capacity in the
global economy.
This is unlikely with the amount of
excess capacity in the
global economy.
The thesis is that
global growth would eventually absorb this
excess capacity, but with the economies of many other countries in the tank this may not happen.
«The
global economy is soft, and there's
excess capacity, so I believe inflation is still preventable,» Herro says.
If such is the case, the premium may have ended when
global oil storage
capacity became exhausted; the contango would have deepened as the lack of storage supply to soak up
excess oil supply would have put further pressure on spot prices.