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Home > Reports > Annual Report 2019 > Outlook > Outlook for 2020

Global economic growth is expected to continue to decelerate in 2020, with the weakness in economic growth attributed to falling growth in major advanced economies and China and the adverse impact of the recent outbreak of novel coronavirus in China.

Similar to 2019, global policymakers will likely continue implementing monetary and fiscal stimulus to support growth in 2020. While the global economy will keep on facing some major risks and headwinds in 2020 – such as new trade conflicts, geopolitical tensions, and high debt levels – a phase-one trade agreement between the US and China signed on 15 January 2020 and the UK’s orderly exit from the EU on 31 January 2020 have reduced uncertainties related to global trade protectionism and a disorderly Brexit. 

Advanced and Emerging Economies

Economic growth of advanced economies is projected to continue deteriorating in 2020. The predicted fall in economic growth of advanced economies will likely stem from an ongoing decline in investment growth, which will outweigh positive effects of improvements in global trade. In contrast to advanced economies, emerging economies are expected to experience a modest improvement in economic growth in 2020 over 2019. Their economic growth in 2020 is likely to be supported by improvements in investment, consumption and trade growth. 

Regional Economies

The Saudi government will continue to implement its reform agenda while supporting near-term growth. Targeted infrastructure and development projects are expected to stabilize and strengthen the construction, manufacturing and transportation sectors. Authorities will also continue to make progress with structural reforms targeting education, labor, and housing. While the economy may face headwinds in 2020 due to the Vienna Alliance’s decisions to cut OPEC and non-OPEC production quotas, fixed investment, and private consumption will likely recover slightly in 2020. Solid non-oil activity will also continue to underpin headline economic growth, which will likely improve significantly in 2020.

In the US, an increase in federal spending under the 2019 Budget Act, an accommodative monetary policy, easing financial conditions, an improvement in trade relations with China, robust private consumption and solid employment and income growth are expected to support economic growth, whereas weaker fixed investment growth, capacity constraints, a strong dollar and decelerating global economic growth will weigh on growth. On balance, US real GDP growth is projected to continue softening in 2020. The US Federal Reserve Bank is also expected to maintain its highly accommodative monetary policies to support growth, though the marginal impact of its policy on US economic growth will keep on waning.

China’s economic growth is expected to continue decelerating in 2020, reflecting slowing domestic demand growth in the wake of the government’s measures to rein in the country’s high private-sector debt and to accelerate China’s transformation from an export- and investment-led model to a private consumption-led model, as well as the negative impact of the recent outbreak of novel coronavirus in China. However, the Chinese government is expected to continue to provide measured fiscal and monetary stimulus in 2020, thereby ensuring that China’s economic growth decelerates at a more moderate pace. The phase-one trade deal with the US signed in January 2020 will also provide some support to growth.

The weakness of the Eurozone economy will further increase in 2020, with the Eurozone and all major economies of the Eurozone recording a slowdown in economic growth. Moderation of investment and consumption and unfavorable export prospects will be the major reasons for the softening economic growth. The ECB is expected to deliver additional monetary policy stimulus in 2020, although its accommodative monetary policy will continue to produce diminishing marginal benefits. 


Saudi Arabia will continue implementing its reform agenda while supporting near-term growth.

Industry Trends

The world’s global industrial production growth is expected to improve in 2020 after bottoming out in 2019. The improvement will likely be somewhat broad based, with industrial production growth increasing in most advanced economies and emerging economies in 2020. Among major economies, the Eurozone and Japan will likely see an improvement in industrial production growth, whereas the US and China are expected to experience a decline in industrial production growth. 

Industry Segment Trends

The world’s industrial production growth is expected to witness lower growth in 2020, with the US, EU and Asia economies experiencing slower growth in addition to the disruptions to industries supply chains caused by coronavirus. The petrochemicals dependent industry sectors are expected to witness diverse trends. The automotive industry is expected to remain in contraction mode during 2020 as a result of slowdown in the US, China and Europe. Unlike the automotive industry, the construction industry is expected to improve in 2020 driven by growth in Asia Pacific. The textile and electronic industries are expected also to grow in 2020 as demand for these two sectors less affected by global economic slowdown. Healthcare sectors are expected to benefit from governments’ efforts to fight coronavirus. 


The Chinese government is expected to continue to provide measured fiscal and monetary stimulus in 2020.

Petrochemical Industry Trends

The global petrochemical industry is expected to continue to grow during 2020 with the US and Asia leading this growth. The ethylene chain is expected to be the most challenged chain as supply surpass demand growth with additions across the chain supported by low US natural gas price that expected to hit record low, as a result, petrochemicals prices expected to remain under pressure during 2020.

Low global demand for methanol especially in the US, China and India and more cheap supply from US and Iran will continue to weigh on prices. Low prices in EU are expected to be maintained by the ongoing suspension of duty on methanol arriving into the EU implemented by the European Commission, which was extended until further notice. Margins for 2020 are expected to slightly decline in most regions.

Weak global demand for PE and additional US exports, plus new Chinese capacities, are expected to maintain pressure on prices. US now already doubled its exports to the world during 2019, selling at historical low prices. Sustainability efforts by governments around the globe are expected to trim demand for virgin resins via bag bans, which is also driven by consumer preferences. Slightly lower margins are expected during 2020 for most regions. Margins for Asian naphtha-based producers expected to remain close to or even below breakeven thresholds.

The US is also expected to increase ethylene glycol exports to the world, and China is adding more capacities that are leading to higher availability and less imports on top of weak global demand, adding more pressure on prices and margins. Demand from all derivatives is expected to be weak in all regions and will be heavily impacted by production cutbacks among Chinese PET producers due to weak market, high inventory and poor operating economics as a result of lengthy supply. Profit margins for 2020 are expected to slightly decline compared to previous year. Margins for Asian naphtha-based producers are expected to remain close to or even below breakeven thresholds. 

Upstream Trends

Weak demand for oil and plenty of supply is expected during 2020, driven by strong US production amid slower global economy growth, lower demand for jet fuel due to movement restrictions imposed by governments around the world to trips to and from Asia due to coronavirus will add to the pressure on prices. Global naphtha price expected to decline with crude weakness amid expectation of soft demand. US natural gas price is expected to hit record low as a result of continuous strong production and stagnated demand. A plentiful surplus of ethane in the US will keep pressure on prices. Tracking naphtha price, liquefied petroleum gas prices are expected to show a downward trend driven by strong production and weak demand. 

SABIC Outlook for 2020

SABIC’s performance in 2020 is expected to be in line with global petrochemical industry trends. In 2020, SABIC will further increase focus on “self-help” initiatives to maximize profitability. The focus will particularly be on optimization of low-profitability products and assets in the portfolio, and further curtailment of non-discretionary spend. While benefits from previous optimization initiatives will assist in dampening the impact of market headwinds, SABIC’s plans for profitable and sustainable growth will continue. SABIC will also continue to invest in innovation, actively seek opportunities, and bring optimization through transformation. 

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