Cefic predicts slowdown for EU chemicals makers

Brussels - European chemical industry group Cefic has forecast output in the chemical industry, excluding pharmaceuticals, to grow by 1.4% in 2008, compared to 2.1 % in 2007. The year 2009, it said, should show a slight improvement with growth of 1.5%.

The global economy is losing speed, especially in the US, while economic prospects for Europe and worldwide have become less favourable, said Cefic. Prospects, it noted, have been affected by the financial crisis in the US, higher energy costs, and, for the Euro zone, the appreciation of the Euro against the US dollar.

According to the Brussels-based organsation, output from the EU chemicals industry showed modest growth in the first quarter of 2008, with the production index of 0.5% above the level of the previous year. Cefic expects an output growth of 2.0% in 2008 for the EU chemical industry as a whole, down from 2.5% in 2007.

Most chemical sub-sectors will not show better growth in 2008 compared to 2007. For 2009, growth prospects are slightly better, with the exception of polymers.This sector is experiencing increasing import pressure and it is also affected by lower demand from main downstream users in Europe such as construction, automotive and packaging, said a Cefic statement

Prospects for the EU chemical industry are however sensitive to a number of unpredictable factors, continued Cefic. These, it said, include rising oil prices, the financial crisis linked to the US housing market, the evolution of industrial demand of the key customers of the chemicals industry, and the evolution of the value of the euro against the US dollar.

"The global economy started losing momentum during the last few months, mostly as a consequence of the financial crisis and the surging oil prices. The slowdown has been most marked in the developed economies, particularly in the US, where the housing market correction continues to put pressure on consumer and business confidence," said a Cefic statement.

Growth in the EU has also decelerated, while activity in Japan has been more resilient. The emerging and developing economies have so far been less affected by the financial crisis and continue to grow at a rapid pace, especially in China and India, although activity is beginning to slow in some countries too. World GDP, meanwhile, is expected to grow by 2.7% this year by 3.1% next year, with EU GDP forecast to grow by 1.9% in both 2008 and 2009.

Charts available: http://www.cefic.org/Files/Publications/Slides.pdf