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After a good year of economic output growth, the EU chemical industry is losing momentum and a large drop in growth is expected for 2008 because of a cooling down of the world economy.
After a good year of economic output growth, the EU chemical industry is losing momentum and a large drop in growth is expected for 2008 because of a cooling down of the world economy. The pharmaceuticals sector, which although unable to match its extraordinary growth of 8.1% in 2006, is predicted to be one of the leaders in 2008, with a predicted growth rate of 3.5%.
For the EU chemical industry as a whole, 2007 began with significant growth - a rise of 2.7% compared with the same period of 2006. The accelerated growth in chemicals (excluding pharmaceuticals) is partly based on strong growth rates in industry in general, and especially in important chemical downstream user industries such as automotive, machinery and equipment, and all sectors benefiting from a relatively good macroeconomic environment for the EU. Domestic demand remained strong, but the data showed an increasing import pressure for some chemicals subsectors, such as polymers and speciality chemicals.
Growth began to slow in October 2007 and the chemical industry is now sensitive to a number of serious risks. The continuing US dollar weakness against the euro weighs more and more heavily on the export performance of EU industry while continuously high oil prices, though they have apparently had only a limited dampening effect on the overall macro-economic environment so far, will lead to higher production costs, and lower consumer and business confidence. Also, the financial crisis in the US could have a stronger impact than expected on the world economy. Because of these reasons, the European Chemical Industry Council expects an output growth of only 2.3% in 2008 for the EU chemical industry as a whole, a move down from 3% in 2007.
However, high economic GDP growths predicted for emerging markets Asia (7.6%) and Eastern Europe (5.6%) could offer interesting trade opportunities for Europe.