(Reuters) – German chemical association VCI on Thursday said it saw further decline in the country’s chemical industry in 2023, weighed down by persistently high inflation, weak global economy, energy crisis in Europe and Germany’s regulatory problems, among others.
Industrial production including pharmaceuticals was set to decline 5% in 2023, while industry sales were expected to fall 7%, VCI said in its quarterly report.
However, it flagged some positive effects from easing energy and commodity prices seen in recent months, which should stabilize the situation in the first quarter of 2023, even though the overall mood remained grim.
“Even if the mood brightens, the worries remain and unlike the pandemic or the global economic crisis, there will be no powerful recovery this time,” said VCI’s Managing Director Wolfgang Grosse Entrup.
European chemical producers last week painted a bleak picture of their prospects for 2023, citing the continuing fallout from Russia’s invasion of Ukraine, high inflation and slowing economic growth.
“We got off lightly this winter. The real challenges for Germany’s industry still lie ahead. Nothing has been solved,” Grosse Entrup said.
He added the energy crisis had revealed many local regulation problems in Germany.
“Less regulation for more transformation,” Grosse Entrup said. “Our answer to the U.S. IRA should be an RRA – a Regulation Reduction Act.”
Companies across North America and Europe have in recent months cheered the Biden Administration’s $430 billion U.S. Inflation Reduction Act (IRA) that includes major provisions to cut carbon emission, boost domestic production and manufacturing.
In the final quarter of 2022, German industrial production including pharmaceuticals fell by 14% from a year earlier, while the sector’s revenues increased by 4.9% on the back of a 17.7% rise in producer prices, VCI said.
(Reporting by Andrey Sychev and Bartosz Dabrowski in Gdansk; Editing by Milla Nissi)
