European chemicals face 'moderate' growth
6 Dec 2000
European chemical industry output is set to grow by 3.7 per cent this year, but will slow down to just 3.2 per cent in the following twelve months, according to the European Chemical Industry Council, CEFIC. A general slowdown in world trade is mainly to blame, with slackening of demand in many of the industry's markets.
European chemicals producers had a trade surplus of E42billion in 1999, the largest of any manufacturing sector. It improved its position during the first half of 2000, with the largest gains in organic chemicals, pharmaceuticals and perfumes and cosmetics. This year will also see the industry outperforming its competitors in the US and Japan, due to strong domestic demand in the US and the relative weakness of the Euro.
Next year's expected slowdown results from three main factors, says CEFIC. The key driver is a slowdown in world trade and overall economic activity, especially since the US economy is expected to lose pace. This will have a knock-on effect of decelerating growth in the European economies; GDP growth of 3.1 per cent in 2000 will slow to 2.8 per cent in 2001. Moreover, the business cycle in Europe is 'very favourable' in 2000, with chemicals export growth, including trade within Europe, of 8 per cent over the year. This will not be sustained, and will fall back to about 5 per cent next year as external demand also slows.
Faced with this slowdown, CEFIC president Jean-Pierre Tirouflet expressed concern over some of the EU's proposals over regulation of chemicals. Costs of notification of new chemicals, and the length of the regulation process, are likely to hinder innovation, he argued. Incipient carbon/energy taxes, such as the UK's climate change levy, will also threaten performance.
'We need a clear, predictable and pragmatic EU regulatory framework that considers the internal market and the future dimension of the EU, together with the competitiveness of the EU chemical industry in its capacity to deliver high-tech products to all sectors of society and as a major employer,' he stated.
