EU CHEMICAL INDUSTRY: SLOWDOWN IN 2005 - BETTER ...
European Chemical Industry Council
For further information:
Moncef HADHRI Marc DEVISSCHER
www.cefic.org
PR1847
+3226767282 +3226767223
[email protected] [email protected]
EU CHEMICAL INDUSTRY: SLOWDOWN IN 2005 - BETTER PROSPECTS FOR 2006 Brussels, 6 December 2005 – According to its year end “Economic Outlook”, Cefic, the European Chemical Industry Council, expects output in the chemical industry (excluding pharmaceuticals) to grow by only 1.6% in 2005, compared to 2.6% in 2004. The year 2006 may show a modest improvement, possibly reaching growth of 2.3% (Chart 1). The European chemical industry experienced a slowdown in production growth in 2005. External demand for chemicals was less dynamic due to a deceleration in global economic activity. Domestic demand in Europe could not compensate for the fallback in foreign demand. High crude oil prices (57 USD/bl) had put pressure on private consumption. Therefore, industrial production was weak (Chart 4). In the EU chemical industry, the business climate illustrated a loss of confidence during the first half of 2005. The assessment of the production situation was less favourable, and business expectations worsened. But this downturn trend was only temporary, as the business climate has been improving since September 2005 and this positive trend is likely to continue through the end of 2005. The various chemical sub-sectors are impacted to differing degrees by the weaker economic situation in 2005 (Chart 2). This year shows a sharp increase in production for basic chemicals, especially petrochemicals and inorganics production. By contrast, after having performed very well in 2004, specialty & fine chemicals activity decreased as a consequence of weaker global demand, intensive international competition and cost increases (e.g. oil prices).
The chemical industry expects better business developments in Europe in 2006. Encouraging signals from business and consumer confidence and more export opportunities should contribute to a recovery of the domestic economy. For 2006 as a whole, Cefic expects a production increase of 2.3 % (excluding pharmaceuticals). Chemical production including pharmaceuticals will grow by 2.6 %. Most chemicals sectors will show this improvement.
International context: •
The world economy remains healthy in 2005 but is losing some steam. In 2006, this moderate slowdown trend will continue. As in 2004, emerging Asia leads the world’s economic performance (Chart 3).
• Higher oil prices are generating spill-over effects on economic activity in the main regions in the world. The hypothesis for average oil prices over the whole of 2005 and 2006 is around 57 USd/bl. • Economic growth in the EU continues to lag behind the rest of the world (Chart 3). The latest indicators are showing that EU economic expansion remains very modest in 2005. Domestic demand is still weak and the surge of oil prices dampens private consumption as well as investment of firms. Compared with Cefic’s June Outlook, expectations for EU GDP for 2005 have been revised downwards. EU GDP growth for 2005 is now forecast at only 1.5% instead of 1.8% forecasted in June 2005. A slight improvement is expected for 2006 with GDP growth of 2%. **************
► Chart 1. Chemical prospects: EU versus US
► Chart 2: European chemical industry : Sectoral Outlook: 2004-2005
► Chart 3. World prospects for the economy
► Chart 4. World industrial prospects
For further information:
Moncef HADHRI Marc DEVISSCHER
www.cefic.org
PR1847
+3226767282 +3226767223
[email protected] [email protected]
EU CHEMICAL INDUSTRY: SLOWDOWN IN 2005 - BETTER PROSPECTS FOR 2006 Brussels, 6 December 2005 – According to its year end “Economic Outlook”, Cefic, the European Chemical Industry Council, expects output in the chemical industry (excluding pharmaceuticals) to grow by only 1.6% in 2005, compared to 2.6% in 2004. The year 2006 may show a modest improvement, possibly reaching growth of 2.3% (Chart 1). The European chemical industry experienced a slowdown in production growth in 2005. External demand for chemicals was less dynamic due to a deceleration in global economic activity. Domestic demand in Europe could not compensate for the fallback in foreign demand. High crude oil prices (57 USD/bl) had put pressure on private consumption. Therefore, industrial production was weak (Chart 4). In the EU chemical industry, the business climate illustrated a loss of confidence during the first half of 2005. The assessment of the production situation was less favourable, and business expectations worsened. But this downturn trend was only temporary, as the business climate has been improving since September 2005 and this positive trend is likely to continue through the end of 2005. The various chemical sub-sectors are impacted to differing degrees by the weaker economic situation in 2005 (Chart 2). This year shows a sharp increase in production for basic chemicals, especially petrochemicals and inorganics production. By contrast, after having performed very well in 2004, specialty & fine chemicals activity decreased as a consequence of weaker global demand, intensive international competition and cost increases (e.g. oil prices).
The chemical industry expects better business developments in Europe in 2006. Encouraging signals from business and consumer confidence and more export opportunities should contribute to a recovery of the domestic economy. For 2006 as a whole, Cefic expects a production increase of 2.3 % (excluding pharmaceuticals). Chemical production including pharmaceuticals will grow by 2.6 %. Most chemicals sectors will show this improvement.
International context: •
The world economy remains healthy in 2005 but is losing some steam. In 2006, this moderate slowdown trend will continue. As in 2004, emerging Asia leads the world’s economic performance (Chart 3).
• Higher oil prices are generating spill-over effects on economic activity in the main regions in the world. The hypothesis for average oil prices over the whole of 2005 and 2006 is around 57 USd/bl. • Economic growth in the EU continues to lag behind the rest of the world (Chart 3). The latest indicators are showing that EU economic expansion remains very modest in 2005. Domestic demand is still weak and the surge of oil prices dampens private consumption as well as investment of firms. Compared with Cefic’s June Outlook, expectations for EU GDP for 2005 have been revised downwards. EU GDP growth for 2005 is now forecast at only 1.5% instead of 1.8% forecasted in June 2005. A slight improvement is expected for 2006 with GDP growth of 2%. **************
► Chart 1. Chemical prospects: EU versus US
► Chart 2: European chemical industry : Sectoral Outlook: 2004-2005
► Chart 3. World prospects for the economy
► Chart 4. World industrial prospects
