German chemical lobby VCI reduces its 2024 forecast amid political turmoil
The German chemicals industry association VCI lowered their annual forecasts on Wednesday, citing the economic stagnation in Germany and political turmoil.
The association, which represents 1,900 companies within Germany's third largest industrial sector, is expecting production volumes, including pharmaceuticals, to increase by just 2% in this year. This is a significant drop from the 3,5% growth it predicted for nearly six months.
It is expecting industrial sales to fall by 2% compared to the 1.5% increase previously predicted.
VCI stated that the downbeat outlook is due to a challenging backdrop, where the German economic landscape continues to stagnate. The federal political landscape has been occupied largely with themselves, and the mood within the companies couldn't be worse.
In a press release, VCI director-general Wolfgang Grosse Entrup stated that the crisis was largely a home-grown problem.
The collapse of Olaf Scholz’s coaliton, and the disagreements between Scholz’s Social Democrats and the FDP over economic and industrial policies, threw Europe’s largest economy into chaos.
The coalition had struggled to agree on the package of energy subsidy measures that the German government agreed to implement in order to help its struggling industry.
Sebastian Bolay is the director of energy, environmental and industry for the German Chamber of Commerce and Industry. He said that he hoped that a deal could be reached in time to ensure that the industry would only pay the European Minimum Rate of Electricity Tax in the future.
In an emailed response, he said that "low electricity prices are a powerful tool for companies to reduce carbon emissions in their processes."
VCI reported that the chemical sector, which includes pharmaceuticals, saw a 0.1% increase in industrial production, a 1.8% drop in sales, and a 0.3% decline in producer prices in the third quarter.
Through 2023, the industry was suffering from high production costs as well as weak demand. Some companies showed signs of recovery as early as 2024. However, this optimism has faded since then due to high costs and labour shortages. Reporting by Anastasiia Kozolova and Ozan Egenay, Gdansk. Editing by Milla Nissi.
(source: Reuters)
