German chems’ business expectations weaken on economic uncertainty – VCI

LONDON (ICIS)–Sales and production rose for the German chemical-pharmaceutical industry grew by 5.5% in the first half of 2018, while production was up 5%, but business expectations have weakened, according to the German industry trade group VCI on Thursday.

Sales rose 5.5% year on year to over €100bn, while production rose 5% over the same period, according to the report.

Specialty chemicals (4.5%) and pharmaceuticals (11%) were the main drivers in the year-on-year growth in production, however, less pronounced growth for petrochemicals and polymers (1.5%) moderated the overall growth.

Employment figures in the industry, meanwhile, were up 0.5% to 455,200 employees.

Despite the positive figures, business expectations in the industry are less favourable than they were at the beginning of 2018.

“There are more and more economic and political risk factors,” VCI said.

“The danger of a global trade war between the US, China and the EU, the consequences of a hard Brexit and the stormy oil price development are thought to give little reason to hope for a continued upswing.

Kurt Bock, VCI president, added that growth has slowed while risks to the economy have accelerated and that headwinds are getting stronger.

VCI forecast that the second half of the year will be weaker than the first and that as a whole for 2018, production will increase by 3.5% versus 2017, while prices are expected to rise by 1.5% resulting in a 4.5% increase in total sales to €204bn.

As well as the macroeconomic worries, VCI says the lack of positive industrial policy impulses from the German government that could counter the growing risks to the economy is at fault for the negative sentiment in the industry.

“Just as with migration and integration or demographic chance, the ability to innovate is about the future of our country,” said Bock.

“But this seems to be increasingly moving in the background among the political priorities in Berlin.”

Pictured: Parked freight cars in Maschen, Lower Saxony, Germany
Source: Gerken & Ernst/imageBROKER/REX/Shutterstock