Cefic expects output in the chemical industry (excluding pharmaceuticals) to grow by 1.4% in 2008, compared to 2.1 % in 2007. The year 2009 should show a slight improvement of growth (+1.5%).

The global economy is losing speed, especially in the US. The economic prospects for Europe and the world have become less favorable. They have been affected by the financial crisis in the USA, higher energy costs, and, for the Euro zone, the appreciation of the Euro against the US$. These developments are already starting to affect European business. Regarding the EU chemicals industry, output (excluding pharmaceuticals) experienced a modest growth in the first quarter of 2008, with the production index of 0.5% above the level of the previous year.

Looking ahead, Cefic expects an output growth of 2.0% in 2008 for the EU chemical industry as a whole (including pharmaceuticals), 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.

Prospects for the EU chemical industry are however sensitive to a number of unpredictable factors such as the oil price development, the financial crisis linked to the US housing market, the evolution of industrial demand of the key customers of the chemicals industry, and, last but not least, the evolution of the value of the euro against the US Dollar.

Global Economic Environment

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 United States, where the housing market correction continues to put pressure on consumer and business confidence. Growth in the European Union 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 is expected to grow by 2.7% this year by 3.1% next year. EU GDP is expected to grow by 1.9% in both 2008 and 2009.