German chemical industry less optimistic about growth in second half of 2018

Global political and economic uncertainty, particularly the looming trade war and Brexit key roadblocks

The German chemical-pharmaceutical industry developed positively in the first half 2018, but forecasts less optimistic outlook for the remaining year. According to the German chemical industry association Verband der Chemischen Industrie (VCI), for the January-June 2018 period, chemical industry sales increased by 5.5 percent against the previous year to well over 100 billion euros. Production in Germany’s third largest industry grew by altogether 5 percent.

According to the report, while the production of specialty chemicals grew by 4.5 percent and pharmaceuticals achieved an output growth of over 11 percent, the production volumes for petrochemicals and polymers increased by 1.5 percent. The number of employed went up slightly to 455,200 staff (+0.5 percent).”

Meanwhile, the business expectations of the industry for the second half of 2018 are somewhat less favourable. According to the VCI report, companies are no longer as optimistic about the future as they were at the beginning of 2018. There are more and more economic and political risk factors. The danger of a global trade war between the USA, 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. VCI President Kurt Bock says, “Growth has slowed down while the risks to the economy have increased. Headwinds are getting stronger.”

Anticipating a weaker second half of the present year, the VCI forecasts for 2018 as a whole a production increase by 3.5 percent. Prices should rise by 1 percent, so that the industry’s total sales are likely to improve by 4.5 percent to over 204 billion Euros.