Eu chemical industry: Good year 2006 with moderate slowdown for 2007
The year 2006 has been favourable for the European chemical industry. Cefic, the European Chemical Industry Council, expects output in the chemical industry (excluding pharmaceuticals) to grow by 2.5% in 2006, compared to 1.5% in 2005. The growth is clearly above the average growth rate over the last five years. Although the year 2007 may show a modest slowdown, the business of chemistry will remain robust, reaching growth of 2.2%.
According to Cefic, the European chemical industry has experienced a positive development during 2006. Chemicals business has improved strongly, mainly driven by the strong domestic demand and the dynamic growth of trade activities with the major EU trade partners. Chemicals sales have improved continuously since the beginning of the year. Domestic sales are expected to grow by 4.6% in 2006. This upswing in domestic sales has been mainly driven by the favourable business climate in most of our customer industries. This is leading to stronger domestic demand for chemicals in the EU.
The trade development with the major EU trade partners has been a second driver for the growth of the EU chemicals industry. Exports have grown higher than imports, resulting in an encouraging trade surplus. Most chemicals sectors have benefited from the improved business conditions. Basic inorganics, polymers and petrochemicals have continued to grow in 2006. Fine and specialty chemicals are expected to grow by 2.8% in 2006 after a drop of 1.2% last year, eventually taking advantage of a stronger industrial demand - especially from the construction sector. Healthy household confidence has led to higher consumption that is driving up consumer chemicals activity by nearly 4% in 2006.
Against this background, the business climate has deteriorated slightly during the last quarter 2006. Current chemicals confidence is still good but optimism is gradually decreasing. Looking ahead, the world economy is expected to experience a slowdown in 2007, essentially in the USA. Oil price development and the weak US dollar are still a source of uncertainty. Irrespective of these dampening factors, Cefic expects an output growth of 3% in 2007 for the EU chemicals industry as a whole (including pharmaceuticals), moving down from 3.6% in 2006.
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