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Management Side
Technical Side
IMF’s Prediction
Print
On Monday, 25 April 2011, the International Monetary Fund (IMF) came out with a forecast stating the Chinese economy would overtake the U.S. economy as #1 in the world by 2016 — a scant 4 ½ years from now. Coupled with Standard & Poor’s previous week’s caution about the future of the U.S. AAA credit rating, this was yet another rapid-fire signal that the United States may be fading in world economic circles.

The pulp and paper industry is a global industry, as we all know. Pulp, the most traded raw material in our industry, has been sold in U.S. dollar-denominated units for years. This most likely was because the U.S. currency was the most plentiful and trusted currency in the world.

However, the previously mentioned two announcements may portend an end to this status. “Trusted” may be erased should the Standard & Poor’s prediction be realized, and the IMF’s suggests an end to the most plentiful. As an industry, we may have to learn to live in a new world.

Energy, another key component, has also been denominated in U.S. dollars for a long time, and there is already talk of changing this economic measure. One can almost be assured pulp will follow.

This will lead to a new type of specialist being quartered in our companies — someone who knows a bit about currency risks and political stability. It will make our businesses more complicated. It will add another bit of uncertainty to profit predictions. In short, more headwinds for our industry to maneuver.

Here at PaperMoney, we’ll be keeping an eye on this and offering suggestions and insights as appropriate. This will not go away.

A Consultant Connection Member at your service: HurterConsult Inc. - Consulting Engineers for Pulp, Paper, Fiberboard & Cellulosic Biofuels from Nonwood Fibers, Wood, Wastepaper & Purchased Pulp | Resource, Market & Feasibility Studies, Engineering Solutions & Technical Advisory Services | Bob Hurter (613) 749-2181



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