Slow growth for Europe
3 Feb 2003
The European chemicals industry is set to grow by 2.7 per cent in 2003, according to BASF's chief economist. Ralf Groynch, who also chairs Cefic's economic outlook committee, does not expect strong growth to return to the sector until 2004, he told the CIA's Business Outlook Conference.
Groynch's forecasts are based on two models, depending on whether or not there is an attack on Iraq this year.
If the attack occurs - which Groynch's model assumes will happen in the first three months of the year - there will be a 'temporary drastic oil price peak' of around $32 per barrel, followed by stock market slides and a depressed economic situation for at least two quarters.
If there is no attack, however, Groynch predicts a 'fragile recovery' late in the year, with oil prices falling gradually from a spike of around $24 per barrel. Economic conditions may be eased by a relaxation in monetary policy and a possible rate cut from the European Central Bank.
In this 'base case', Groynch said, Europe can expect to see GDP growth of around 1.7 per cent in 2003 and 2.6 per cent in 2004, with the UK leading the pack at growth of 2.3 per cent and 2.8 per cent. In the case of war, however, growth this year will be pegged back to 1.1 per cent this year, and 1.6 per cent in the UK.
This will have inevitable repercussions for the chemical industry, he said. Last year saw growth of some 3.3 per cent, and BASF is forecasting growth of 3.6 per cent in 2004.
In the US, the American Chemical Council is predicting brisker business in 2003, with a 3.5 per cent growth in volumes. The biggest improvement will be seen in the fertiliser sector, with a 5 per cent volume increase, followed by a 4.8 per cent increase in petrochemicals and intermediates and a 4.3 per cent increase in inorganic chemicals.
