Sentiment is improving, but the recovery remains fragile
"Politicians must finally address the obstacles to growth—high costs and crippling bureaucracy."
Advertisement
Sentiment in the chemical industry continued to improve in September. For the second month in a row, the majority of chemical companies view their current business situation positively. Expectations also brightened, turning positive again for the first time in more than a year. Specifically, this means that companies are anticipating a pickup in export business and are, on the whole, looking ahead to the coming months with slightly greater confidence. The chemical industry is thus following the broader economic trend: leading economic research institutes have recently revised their growth forecasts for Germany upward. However, one thing is also clear: there is still no sign of an independent and sustainable recovery. The economic upturn is primarily supported by government investment in infrastructure and defense. While there are initial signs of stabilization in private investment and industrial demand, these remain at a low level overall.
The latest industry data also show no sign of a sustained turnaround. New orders from both domestic and foreign markets began to decline again as early as the summer. This is weighing heavily on German chemical companies: About 40 percent cite the lack of orders as a serious obstacle to business. In addition, production and sales have recently lost momentum. And temporary boosts resulting from the war in Iran—such as inventory buildup, precautionary orders, and production outages among Asian competitors—have run their course. At the same time, the industry continues to suffer from the well-known structural challenges. High costs, excessive bureaucracy, and regulation are holding back investment and industrial demand. As a result, due to the cost disadvantages of operating in Germany, companies can only benefit to a limited extent from rising foreign demand.
VCI Executive Director Wolfgang Große Entrup comments: “Just because sentiment is no longer at rock bottom doesn’t mean there’s cause for celebration in the chemical industry. We do not see a sustainable upswing. The recent recovery remains fragile. Confidence alone is not enough to reignite production and investment. Policymakers must finally remove the obstacles to growth—high costs and crippling bureaucracy.”
Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.
Other news from the department business & finance
