Chemicals look up
4 Jul 2003
Chemicals production is set to rocket next year, according to the economic panel of the European Chemical Industries Council, CEFIC. But the growth will follow another year of near-stagnation, the panel revealed at CEFIC's recent annual meeting in Hamburg.
The war in Iraq had the expected effect on European chemicals output. The panel said it plummeted. This year's performance will see production growth of just 0.7 per cent, down even on 2002's dismal 1.2 per cent. Along with weak demand in Europe, the near non-existence of output growth was due to a sharp deceleration of world output and trade and the weakness of the US economy.
The panel pinned the weakness of demand in Europe on several factors: 'the absence of a strong driving economy, pulling the rest of Europe and the unrest in geopolitics and social reform debates, creating a considerable degree of uncertainty for the future of both the consumer and producer sides.'
Worldwide chemicals production was also weak. Although last year's growth was almost healthy, at 2.6 per cent, this year's is expected to slip back to 1.4 per cent
CEFIC president Eggert Voscherau is focused on the sunny side. 'I must admit that the first half of 2003 has been considerably weaker than we had forecast last November, with flagging industrial demand, especially in the second half of the year, compounding the uncertainties generated by the Iraq conflict,' he commented. 'However, I see some improvements in confidence and the overall economic development. This should drive a stronger industrial demand which, hopefully, will start in the second half of this year.'
CEFIC's forecasters are predicting a surge in worldwide growth for chemicals production next year: from 1.4 per cent this year, up to 3.8 per cent in 2004. All of the geographical sectors are expected to grow, with Japan's sector - which shrank last year - turning its performance around. A particularly strong performance is expected from the US.
It's the transatlantic factor which is crucial. The panel expects a loosening of monetary policy to lead to an upswing in the US economy, combined with reducing oil prices and an improving world business climate. The panel sounds a note of caution - its forecasts assume that 'no further worsening confidence crisis hits the stock markets'.
