Outlook 2014: Sustained regional growth to fuel plastics industry

The Middle East and Africa regions continue to receive favourable projections, a sign of stability and continuous confidence on these regions’ ability to achieve growth despite the many challenges the global economy faces.

The International Monetary Fund (IMF) raised its forecast for the oil-rich six Gulf Arab countries to 4.4% in 2014, up from the earlier projection of 3.78%, as it expects the Gulf Cooperation Council (GCC) to remain one of the most dynamic and topperforming economies. The GCC comprises of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).Oil and gas receipts represent the bulk of their revenues. The IMF also recognises the strong contribution of the GCC to the global economy and overall world industrial growth.

As a result, major industries in the Middle East are expected to demonstrate higherthan- expected performance in 2014. In particular, the plastics industry in the Middle East will continue being a major contributor to industrial expansion given the anticipated rise in the production volume for chemicals and other raw materials, as well as increased demand for new technologies, machinery, tools and components as local manufacturers step up their production output.

Africa is poised to take off as an industrial giant with growth driven by investment inflows, rising production output and expanding international trade. The IMF even predicts sub-Saharan Africa to post 6% growth in 2014. Contributing to Africa’s growth are South Africa and the emerging economies of Nigeria, Mozambique, Ethiopia and Kenya. Nigeria’s economy is expected to grow by 7% in 2014; Mozambique by 8%; Ethiopia by 6.9%; and Kenya at 5.2%.The continent’s rapidly growing plastics industry is attracting an increasing number of international companies into this lucrative new market. Estimates show that the demand for plastic packaging in Africa has been growing by around 8%, higher than in Western Europe. South Africa’s booming plastics production leads the region, but growing demand has been noted in other African countries due to rising infrastructure, energy, telecommunications and manufacturing activities.

Several major issues will continue to affect the direction the Middle East plastics industry will take in 2014. Sustainability and fuel efficiency of the petrochemical and chemicals industry is equally important. Dr.Abdulwahab Al Sadoun, Secretary General, Gulf Petrochemicals and Chemicals Association (GPCA) said that the GCC petrochemical industry has a long history of reducing emissions and providing value added products. “Not very long ago most of the associated natural gas in the region was flared—this means that the gas found in petroleum deposits was over wasted in the extraction process. In Saudi Arabia, for instance, about 5 billion standard cubic feet of natural gas use to be flared every day, due to its low alternative value. This would result in unnecessary waste of natural resources, as well as pollution. With the creation of chemicals industry, which uses associated gas, flaring has reduced and significant socioeconomic benefits have been realised,” he explained.

The GPCA also expects the Middle  East to be a major player in the global petrochemical and chemicals industry in the foreseeable future as reflected by the scale of expansion both on the commodity side of the industry, as well as on the specialty and performance chemicals side. It is believed that the GCC industry’s cost effectiveness will be retained, ensuring that the sector will continue to expand iNike Air Max