Over on IndustryWeek.com, I read where the International Monetary Fund (IMF) has revised its outlook for overall worldwide business growth to now reflect a 3.7% growth rate in 2008, which is down a half point from its January forecast. Keep in mind that the base of this number is huge, and a half-point is significant. The commentary also indicates a 25% chance of this number dropping below 3%, which is equivalent to a global recession from an IMF perspective.
A regional view of the overall number indicates that the U.S. is forecasted to only grow .5% in 2008, and .6% in 2009. Europe is slightly more optimistic, 1.4% growth in 2008 and 1.5% in 2009. The bulk of demand, from an IMF perspective will come from “Emerging and Developing Nations”, forecasted to grow 6.7% in 2008, and another 6.6% in 2009. China is again the star, with a forecasted growth of 9.3% in 2008, in spite of attempts from China’s political leaders to slow down the existing multi-year growth cycle. U.S. politicians should envy such a problem.
For supply chain product planners and demand planning professionals, this latest IMF data should lay to rest what will be 2008-2009 planning strategies. In terms of overall growth, there appears to be only one growth horse to ride, China and the developing world. Investments in production and distribution capacity to serve these specific markets can well be justified, along with increased unit volumes. There well may be exceptions, for instance if you’re Apple, and supporting building iPhone demand, or perhaps selling depression related medications in the U.S. But the numbers due indicate for at least U.S. growth, it’s a holding pattern, or decline at best. So be well prepared to respond to those continued pressures for overall supply chain cost reduction across U.S. supply chain processes and channels.
This is always a challenge since there is a hope you don’t do something stupid or dumb for the sake of cutting, but cost avoidance is a very prudent strategy, especially for U.S. focused supply chains.